NSW Land Tax Strategy
Trust Conversion — Family Home
A family home held in a discretionary trust in NSW misses out on both the principal place of residence exemption and the land tax threshold deduction. MGS Private advises on transferring the home to individual names without stamp duty and without adverse CGT consequences.
Two NSW land tax problems
for homes held in trust
A family home held in a discretionary trust faces two NSW land tax problems simultaneously: first, the trust cannot claim the principal place of residence (PPR) exemption — so the home is taxed on its full land value at the special trust rate (1.6% flat). Second, there is no threshold deduction.
For an expensive Sydney or regional NSW property, the combined cost of losing the PPR exemption and paying the special trust rate can easily exceed $20,000–$40,000 per year — a permanent ongoing impost with no benefit to offset it.
The solution is to transfer the home from the trust to the individual — but this must be done without triggering stamp duty and without adverse CGT consequences. MGS Private advises on whether this can be achieved, and the precise steps required.
- PPR exemption restored — NSW land tax on the home eliminated entirely once in individual names
- No threshold calculation required — the PPR exemption applies to the full land value
- Stamp duty on the transfer must be assessed — NSW provides specific concessions in some circumstances
- CGT main residence exemption may apply on the transfer — eliminating the capital gain
- The individual must have genuinely occupied the property throughout the trust’s ownership
- Cost base for the future sale must be correctly established in the new owner’s hands
Conditions & Key Analysis Points
Transfer from trust to individual
Family home paying NSW special trust land tax?
Assess whether a transfer to individual names is achievable without duty or CGT. Brief MGS Private through your accountant.