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is NSW land tax claimable?







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Spacespike

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posted 2026-Jul-22, 4:18 pm



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O.P.

My brother has an investment property that was rented out Jul1 st 2025 – February 10th 2026

He received NSW land tax bill 4th February 2026, and paid in on due date 4th March 2026

He moved into the property on February 11th 2026, therefore the property ceased being an investment property and became his principle place of residence as of this date.

His accountant claims that as he is a tax payer on a cash basis for the property, only expenses paid whilst the property was an investment property can be claimed. As he paid the land tax almost a month after he moved in, it cannot reclaimed as a deduction. Even though the property was a rental property previously. The accountant can't give any explanation other than the fact that it was paid after he moved in.

This doesn't sound correct to me and I could not find any information online. On the ATO websiite it clearly states that apportionment is not required for land tax if you moved into your investment property partway into the tax year. So I wanted to ask what applies here? But it doesn't state anywhere that the land tax needs to be paid in full prior to moving into the property in order to claim it as a tax deduction

Can claim the full NSW land tax? Should he apportion it? OR can he not claim anything as it was paid after he moved in. He is really upset about this, as in this economy every dollar matters. Your help would be appreciated.









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Cecile
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posted 2026-Jul-22, 4:50 pm
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I found this on the ATO website: Land Tax is down near the bottom of the page

I'm not here to give advice, but I think your brother should talk to a different tax agent.









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posted 2026-Jul-22, 5:51 pm



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Spacespike writes...

an investment property that was rented out Jul1 st 2025 – February 10th 2026

He received NSW land tax bill 4th February 2026, and paid in on due date 4th March 2026
My understanding is NSW Land Tax relates to property owned on 31 December.

Cecile writes...

think your brother should talk to a different tax agent.
Yes, I would be questioning the agent’s view on it.
ATO; “If you earn rental income from a property, you can claim a deduction for land tax. Include the deduction in the income year the liability relates to, not the year you pay it.”









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O.P.

Thanks for your input. He has reached out to his accountant quoting ATO guidelines where it does not state that Land tax payment date is important. Its just that his accountant kept highlighting that it is according to general cash basis principle.

We understand the general cash basis principle—for most expenses, deductibility depends on when payment is made during the rental period, and I get why something like
an urgent repair paid for immediately after the tenancy ended would still be considered connected to the rental use.

However, It appears land tax is treated differently. we found specific ATO guidance on two separate pages that directly addresses his situation.

The first states, quote, land tax deductions don’t need to be apportioned in the income year you start to use the property as your main residence, or sell the property.

The second goes further, stating, quote, your liability to pay land tax does not rely on the lodgment of a land tax return or on the taxing authority issuing a land tax assessment.
It goes on to say, if a land owner receives a land tax assessment for a year, then later in the same income year starts to use it as their residence, there is no requirement to
apportion the land tax deduction. We consider that the land tax liability was incurred for an income producing purpose because the liability for it was founded in the property’s
use for income-producing purposes.

Hopefully the accountant will agree with this information as it's on the ATO website.









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posted 2026-Jul-24, 9:21 pm



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Spacespike writes...

However, It appears land tax is treated differently.

It should be pro-rata. Land tax bill is paid forward, as the property was rented out from Jan 1st to Feb 10th, the land tax paid on those days should be deductible. The rest of it is not.









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posted 2026-Jul-24, 9:38 pm
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this post was edited

Spacespike writes...

His accountant claims that as he is a tax payer on a cash basis for the property

Individual returns (excluding sole trader businesses) are prepared on a cash basis, so only taxable when paid or received.

So if he had paid for before he moved in, the total would be deductible and not just the proportion it was an Investment property. Same with Council Rates, Water rates, Repairs etc.









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posted 2026-Jul-24, 10:02 pm



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O.P.

That's incorrect. You are not required to pro rata land tax as per ATO guidelines in this instance;

'If a land owner receives a land tax assessment for a year, then later in the same income year either sells the property or starts to use it as their residence, there is no requirement to apportion the land tax deduction. We consider that the land tax liability was incurred for an income producing purpose because the liability for it was founded in the property's use for income-producing purposes.'









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posted 2026-Jul-24, 10:05 pm



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O.P.

Normally this is the case, however this does not apply for repairs carried out immediately after tenants moved out, or when it comes to land tax.

'Land tax liabilities may be deductible, depending on when the land tax liability arises. The timing of when you incur a liability to pay land tax will depend on the relevant state legislation. Your liability to pay land tax does not rely on the lodgment of a land tax return or on the taxing authority issuing a land tax assessment. In many states, the year in which the property is used for the relevant purposes determines when you're liable, even if an assessment does not issue until a later date.
When you receive land tax assessments in arrears, the amount of land tax isn't deductible in the income year in which you pay the arrears. The land tax amounts are deductible in the respective income years to which the liability for the land tax relates. For more information on how to claim a deduction for land tax related to a previous income year, see How to request an amendment to your tax return.'









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curtly
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posted 2026-Jul-25, 9:57 am



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I agree with you Spacespike. You become liable on 31st December. One year they will invoice you in early January and the next year sometime in February. Why would the date they randomly send you the tax statement affect whether you can deduct it or not and how much?

And if you make an objection and it is not settled till until after June 30 (and in the case of a legal case a year or so later) you have to go back and make the adjustment in the year the statement was issued, not in the year when the legal case was settled (ie its not cash accounting).









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Spacespike writes...

We consider that the land tax liability was incurred for an income producing purpose because the liability for it was founded in the property's use for income-producing purposes.

The liability was incurred when it was paid and the property was not income producing at that time.

Apply for a private ruling, if you want a definitive answer









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posted 2026-Jul-25, 10:14 pm



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O.P.

Thanks for your responses.

Based on ATO guidelines I think he can claim the land tax. Accountant will respond soon to him. If accountant doesn't support claiming the land tax, he will either change accountant or apply for private ruling, or both. :)









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posted Sunday at 3:45 pm



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I think he can claim in full and no apportionment necessary









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O.P.

Accountant got back to us and agreed it was fully claimable based on ATO guidelines. Date of payment was irrelevant. Thank goodness I had my brother pushback on his accountants incorrect advice he was given twice.
Always double or triple check even if it's a lawyer or accountant giving you the advice. They dont always get it right!









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