Hi All
What is the situation with land tax where you exceed to threshold. I know that the standard answer is ‘GO interstate’, but if you get big, or just over time, the land tax net will get you.
I assume that in the wrap contract all land tax is payable by the purchaser but at what point. Each year or when you are financed out. Substantial penalties apply for late payment.
Just to put it in the correct light, on a sydney property it can come to $2000 per year. (this is not an expensive property, about $300K)
By the way land tax is also the reason I am considering wraps as the return from rental property is just not there.
Any thoughts!!!
Cheers
For the first time this year I received a land tax bill.
As far as I am concerned this is an extremely regressive, inhibitive tax. Any extra tax is too much tax.
One way around it, is to have each property in its own trust, which is how my solicitor has set it up.Hi Regina
In NSW a trust does not even get the threshold allowance. Even seperate companies are excluded from getting more than one allowance if there are associated directors.
Cheers
Hi Regina and Ziz,
Here’s a few things to note about land tax…
1. It is generally calculated on the unimproved value of the land component of the property and as such disregards the value of the property entirely.
2. In Victoria, there is no land tax payable by the investor. There is a form that your buyer completes that advises the SRO that they are the beneficial owner. (This is a real bonus)
3. It is a tax deduction – which at least softens the blow a little for people with genuine positive cashflow.
Regards,
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve
Isn’t it interesting how land tax alters between states with no consistency, further illustrating how much of a grab for cash this tax is.
In my example the uv is about $120k thus the $2000 land tax.
The option of the benificial owner in Vic certainly helps the wrapping process.
Would this apply in both the lease/buy and straight wrap? Also does the wrappee get the threshold excemption? I assume they would but then again….
As far as softening the blow – a tax, is a tax, is a tax.
So my question is still when you are in the land tax bracket, is it equitable to pass on the land tax cost to the wrappee or do you have to absorb it as a cost of business? My preference would be to pass it on, on a per annum basis.
Certainly I would think that with the number of properties you have on the go and the long term philosophy of your wraps the potential for creeping into the land tax threshold is a real business consideration.
Cheers
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