Hi all,
Just a quick question. I have 2 investment properties so it is fair to say i need to pay land tax on both. However, one of the investment properties was my place of residence for around 14 months. I moved in as soon as i purchased it and after the 14 months moved back home and rented the house out. Should i be paying land tax on this property seeing that i have now rented the property? I have contact the SRO and they said yes i will need to from the moment you have moved out till you move back in, yet a couple people tell me i shouldn't as i should be able to have one property that is exempt? Can any one settle the argument? If it helps the properties are in Victoria.
Thanks in advance
Joseph
If you don’tlive in it you pay land tax. The exemption only applies to a house you live in.
Hi found this so you can claim the exemption. NOTE-this is for NSW.
Also if you are in NSW there is a tax free threshold so you likely wouldn't have to pay anything.Absence from your former residence
What is this concession?
If you move out of your principal place of residence (your home), and move into another residence that you do not own (for example, if you are posted overseas or interstate), you may be able to claim an exemption from land tax. This exemption will be allowed for a maximum period of 6 years.
Eligibility
The exemption will apply if:
You have used and occupied the property as your principal place of residence for a continuous period of at least six months prior to the exemption period
You do not own and occupy another principal place of residence worldwide
The total period in which you receive income from leasing or licensing the property does not exceed six months in a calendar year. (If you lease the property for more than six months in a calendar year, you will have to pay land tax for the next tax year)
Income is derived from people who occupy the property during your absence, provided it is no more than is reasonably required to cover rates, water and electricity charges and similar outgoings (but not mortgage repayments)
If you fail to resume occupation of the house as your principal place of residence following the six-year absence the land will become liable for the next tax year.
Thanks for clearing that up. Seems like Victoria always gets taxed the hardest.
I thought you had to own a certain amount of property (i.e. total over $600k accumulated) to beeligible for land tax i.e. total over $600k? or have you already reached that threshold?
Out of curiosity is land tax worked out on a percentage or is it a flat rate?
Correct me if I’m wrong but I think you have to pay land tax on any land worth $200k or more. The more its worth the more you pay. Dead money really.
Land tax is a huge pain… but as it stands the guidelines for you in Victoria would be:
If you lease out your PPOR for a continuous period 6 months or more it becomes eligible to be assessed for land tax if it has a taxable value of $250,000 or more.
Emma, the State Revenue Office has a scale for rates if you're curious:
http://www.sro.vic.gov.au/sro/SROnav.nsf/LinkView/DA6A217C7F452EF8CA2575D20021EBE7C580F3A333F4AD44CA2575D10080AD1Cjmsrachel wrote:Correct me if I'm wrong but I think you have to pay land tax on any land worth $200k or more. The more its worth the more you pay. Dead money really.Not so!
In NSW it is more like $396,000 – the main residence is usually exempt and doesn't count to the threshold.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for clearing that up guys. Victoria gets the rough end of the stick, again.
There was a write up in API magazine the other month which said that there is a different land tax threshold for all states, i believe from memory that victoria and nsw are the lowest. Queensland never really used to have one but now it is set at somewhere around 600,000. I think this is why a lot of investors with several properties try and stagger them accross different states to try and decrease the land tax that they are required to pay. Don’t hold me to it, but i think there is some truth to what i have just posted. I would recommend looking into it, by the sounds of it though depending on the value of your property you might not be eligible for any exemption.
I have also seen writeups suggesting the revenue offices are considering:
– Aggregating land holdings nationally and taxing them accordingly (in other words, dodging land tax by having a property in each state would no longer work
– Aggregating land holdings regardless of entity they are held in (so for exampe if you hold one property in your own name and another in a trust for which you are the director, the two properties would be "added together" and you would be taxed accordingly)
Neither of these initiatives have come into force yet but keep in mind that the greedy powers that be are considering it.
You might care to look into purchasing property through your own self managed superannuation fund (smsf) which gets its own land-tax-free threshold.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Hope this isnt consdiered Hijacking the thread now he has the answer and aplogies if it is but rather than start a new thread:
Does NSW Land Tax Threshold (or any other state) get applied to an individual or a couple?
I think it is individual from the Government website but I am not 100 percent sure.For example I mean:
Property 1 – split 50/50 between husband and wife – land tax value of $200,000 = i.e. $100,000 each is assigned
Property 2 – split 75/25 between husband and wife – land tax value of $300,000 = Husband $225,000 , Wife $75,000Husband total = $325,000 & Wife Total = $175,000 which re both under the NSW threshold 2012 treshold $396,000 (ignoring average over the 3 years just for this example).
Does this mean no land tax in NSW would be paid or by either member of this couple or do Governments just add the two totals together of any investment property you have a share in regardless of your ownership amount and say that you own $500,000 each?
Please help.
The NSW system is REALLY stupid.
I assumed it was individual (well it is) BUT they also count the together. Found this out the hard way.
So you would each get individual accounts with wife %175K so no payment and husband $325K so no payment. But then you also get a partnership one of $500K so you will have to pay for the amount over the threshold.
If you have a payment on both your individual and the partnership they take the smallest amount off the largest amount so you don't pay twice. It stinks.
So if you bought places with different people you could own more property and not pay the tax. It is totally ridiculous. It SHOULD be just individual. That's fair to everyone.I rang the Office of State Revenue NSW to confirm and this example is how it should work.
A and B own a PPOR – this is generally exempt.
A and B also jointly own an investment property with land value of $396,000. This is exempt as the tax free threshold is $396,000.
A then goes on and buys a property of his own, land value worth $200,000. I wanted to clarify how A would be assessed.
Based on the total values or based on his share.
Since A only owns 50% of the first property his value for land tax would be:
$198,000 for property 1 and $200,000 for property 2.
Total $398,000This is $2,000 over the threshold so he would pay $100 plus 1.6% of $2,000.
NOT 1.6% of the $200,000.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thank you Catalyst and Terry W for taking the time to research and respond.
Much appreciated. Hope your kindness is repaid 1000 times over!
Thanks again
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