WA extends land tax exemption in the face of construction delays

Eligible home owners building their primary residence, who do not own another property, can now receive a land tax exemption for the first three assessment years that their residence is being constructed. And in some circumstances, such as when a builder has gone into liquidation, they’ll be granted a fourth year of tax reprieve to get their homes move-in ready.

Home owners who are eligible for the temporary exemption and have already paid land tax will be able to get a refund, in a rare case of the government making a rule that will result in returning money to residents.

But those who have their sights set on home building but haven’t yet put pen to paper are out of luck, as the rule only applies to property owners who signed their building contract between 1 July 2020 and 30 June 2023.

Even so, the Real Estate Institute of Western Australia (REIWA) said the move represented a substantial saving for residents of the state.

REIWA CEO Cath Hart noted that blown-out construction timelines had added a significant financial burden to residents who were prepared to build.

“The ongoing delays in the building industry have pushed completion times out significantly. This is not only putting a strain on the property market, it’s also putting a strain on people’s finances,” Ms Hart said.

“Land tax is just one of the extra costs people are facing if their home takes longer than two years to complete.

“This will offer some relief for those building or renovating while also juggling the costs of a mortgage or rent on their current residence,” Ms Hart said.

In addition to the exemption for home owners building their primary residence, the state has also changed the rules for those who are building a second home.

They will no longer be required to repay two years of land tax if they are unable to meet the two‑year construction time frame, and may receive an exemption for an additional third year in some exceptional circumstances outside their control, such as those caused by material shortages.

The state’s Treasurer Rita Saffioti noted that the change came as a direct result of delays in the home building sector.

“The residential construction market has faced constraints in recent years, with labour and material shortages limiting the industry’s ability to respond to the strong demand for new housing,” she said.

“This temporary extension will provide relief to the home owners most affected by delayed construction times,” Ms Saffioti added.