There was a posting on this forum recently questioning the need for rent rises because of land tax. Our local paper, the Village Voice, features a front page article about land tax driving rents through the roof.
This is for the eastern suburbs of Sydney, and there are quotes from landlords given as an example.
One property owner who owns a block of 4 units is saying the land tax is higher than the entire rental return of one of the units (so more then 25% of the rental income for the property) and another is quoted as being valued at 1.7 million, therefore the annual tax is $27,000, however the rental income due to the house being old is only $26000.
Landlords are also being quoted as saying the tax goes up by over 30% each year, and they cannot even maintain properties anymore, and are selling up. Tellingly the rental section in the back of the Southren Courier (the other local paper) is now down to a quarter of a page, and only a handful of properties advertised for the entire area.
I do know of people who want to buy investments, but they are wary of the land tax and the interest rate rises so keep putting it off.
It is shameful this NSW government trying to profit from land tax.Zoe,
I find it quite remarkable that a $1.7million property returns only $26K per annum ($500per week) in rental income – that is a 2% yield.
Are you sure those figures are correct?Superhoops
Definitely, not that I know the proprerty they are discussing, but just to give you an eaxmple, the semi we rent at the moment, a similar one sold for nearly a million dollars recently in our street. An old 3 bedroom home sold for 1.28 million in our street last year. This house is a rental, and is being rented for $550 per week. So if the 'real', i.e. market value of the property was 1.28 million, the land tax would be inflated (none of the land tax figures seem to reflect actual values, they are all higher) to well over 1.28 million. So it seems pretty average to me.
I have a friend with a 2 bedroom unit, her land tax value was well over the valuation she received from agents for a proposed sale. It is just the way things are done in Sydney, maybe we are still paying off the Olympics? Who knows…Zoe,
I live in Leichhardt and we are paying $500 pw rent on a property (2 bedroom) that is worth around $800K not sure what the land would be valued at. I would assume not much more. We are currently renting our two bedroom apartment in Stanmore for $420 per week. I think you said you were on the north shore – those rents are cheap for quite large properties – maybe I had better move up there as it seems to be more value for money.Your friend with the unit – her Gross Land Value surely must be under the $359K threshold then? Surely a unit can't be valued that highly unless it is in a complex of 6 overlooking Manly beach or Bondi and the land is valued at $3 Million.
Superhoops
Simple; don't buy in NSW.
The NSW Govt will drive the investors out soon enough the way they're going.
Then we'll see some high rents and cheap properties.
Dear Marc,
Don't buy in NSW! Exactly what I am doing now, no longer buying in NSW either. Only way to go.
And the friend that is trying to sell her unit lost a buyer because of the high land value of her unit, so that is what made her aware of the over-priced valuation. She could not understand why it was valued so much higher than what she was selling it for, so she chased it up and was really annoyed at how ridiculous it is. It does seem to be a problem for the north shore and the eastern suburbs, but give it time, they will start bleeding the inner west dry too, and you will realise how one day you are not affected and the next day, surprise, you are! Even if you are not paying it because it is your only property, you have trouble selling it because of the over inflated land tax attached to your property. Of course it is a deterrent to investors, as they realise they will go over the threshold, and a savvy investor should check the land tax value before buying.Zoe, land tax and land value is based on statistical information gathered through the sale of comparable properties in an area. In assessing the LV of your property, you can view which properties have been used to determine the LV for yours (via the OSR website) and assess for yourself how comparable they are. Unless you have a proper understanding of the Valuation of Lands Act (NSW) and its operation (or have fully discussed the merits of an objection to your LV with a practising valuer) how can you be critical of the LV system? Yes land IS expensive in Sydney, it is reflective of prices for established premises and the cost of establishment of new subdivisions.
Where LV's are out of kilter with property values, it would imply that the property is grossly underdeveloped or in the Maurici case, reflective of an unrepresentative sample of vacant properties in a developed area. It is not unheard of where many owners may be asset rich and cash poor hence their properties may be in disrepair and not earning a market rental – is that the fault of the valuer general, the state government, the financiers, the accountants or the investors poor attitude towards the maintainance of their asset?
A way around paying NSW land tax is to limit your holdings in NSW and to diversify to other states ie buy 2 or three properties in each state/territory – that will take a little while to catch you up on land tax.
i was at a property seminar that got hijacked by a guest speaker
…. who in the course of his discussion on how to buy a million properties on your credit card using shares
was asked about land tax
his response was pretty dismissive ,but contained an element that interested me
oh you never buy them ALL in your name !
you allocate 99% of the property in your name and 1% to some one else like a daughter
and the next one is 99% you and 1% your mum
etc so the one ENTITY never goes over the thresholdmost of what he had to say failed my scam detector and i walked away from the event feeling cheated….
except that one sentance
which i would do a bit of looking into….
perhaps a trust would be a more legitimate entity
but it does add an incentive if the government is going to take the money anywaymiss the coffee in leichhardt !
not the rentHello suavemechanic
There was a thread about this subject some time ago. This involved land tax in WA and though the laws are different in each states you may still find it an interesting read.https://www.propertyinvesting.com/forum/topic/19858.html?SearchTerms=land,tax
Unfortunately we never did get the end of the plot.
Hope this helps
ElkaI won this block of land on a TV program. I've had it on the market since then. (12 months) No luck so far, but have bought house with the land as security. I thought an overseas buyer might be interisted. It is a great block with ocean views and a golf coures near by. Hope someone can help me find a buyer. If I don't find a buyer soon I stand to loose everything. Please help.
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