How to challenge a land tax bill

I've received an eye-watering land tax bill based on a huge jump in valuation of my investment property. How has my property been valued and how can I challenge it?

Land tax is levied on the unimproved capital value (UCV) of an investment property, holiday home or vacant land you own or have a share in, and is challengeable.

The details of how and where to challenge will appear on your notice. Challenges can be mounted to the valuation of the property, not the rate of tax, and they can be done online or lodged in writing.

How is land tax triggered?

Land tax is a state government impost and in NSW it starts being levied when the UCV of a non-prime-residence property exceeds $406,000.

The tax amounts to $100 plus 1.6% of the combined value in excess of $406,000. If your properties, excepting your prime residence, exceed an UCV of $2.482 million, the tax levy rises to 2% over that amount.

In other states the thresholds vary and can be found on their Office of State Revenue websites. In Victoria, for instance, land tax kicks in at a UCV of $250,000 while in Queensland it kicks in at $600,000.

However you lodge your objection, you must have good grounds. Giving reasons such as "I can't afford it", or "It can't be right because I hate my neighbours and they have reduced the value of properties in the area" are not regarded as acceptable grounds.

You can challenge on the grounds that the dimensions or description of the land being taxed are not correctly stated, that the interests held in the land by various parties have not been correctly apportioned, or lands which should have been valued separately have been included in one valuation.

What else can I do?

You can research the local real estate market and argue that an equivalent property in size and position down the road sold for much less than your UCV, or that your land value has gone up by 10% but the newspaper says official statistics say they have gone up only 3% in your suburb.

The value of the house sitting on the land is irrelevant to the UCV.

Any statistics relied on by you must relate to your area. If your property is in the inner city, land values are likely to have risen faster than in the outer suburbs.

Factors such as your personal circumstances or council rates are not considered during the objection review process.

Inform your employer that you intend to contact the tax office about unpaid super.

That might get the ball rolling if the employer wants to avoid a tax officer calling and incurring penalties and interest for unpaid super obligations. The tax office can be contacted on 131 020.

What happens next?

You have 60 days from receipt of the valuation notice to lodge an objection. The last date to object is printed on the front of your Notice of Valuation.

If you want to lodge an out-of-date objection (because, for instance, you are overseas or ill at the time the notice is sent) you must provide full reasons why the objection is late. The Valuer-General will then determine whether to accept the objection.

The Valuer-General will appoint an independent valuer who will call and have a chat with you about your grievance and value the property again.

This will be sent back to the Valuer-General, who will let you know the result. Generally the process takes about six weeks.

In about 50% of cases a variation is recorded, but according to the Property Council these usually mean only small reductions.

What if I am still unhappy with the second valuation?

You can lodge an application in the Land and Environment Court. This will involve an informal mediation with a representative of the Valuer-General to try to reach agreement.

If this fails you will have to take the matter to court. This is where it can become expensive. Even though you can represent yourself, it involves a complex process that may require you to hire a lawyer familiar with the process.

My council rate notice is also too high. How can I challenge that?

Council rates are applied on a group of properties in your area at the rate that applies to all properties. To challenge your rate notice you would need to challenge the UCV of your property as above.

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