Understand Your Land Tax Obligations – Ed Chan

Well it’s that time of the year again if you own Investment Properties and or a Principal Place of Residence that has been rented out (even temporarily) or land and a holiday house.

Whether the property is an investment property or your principal place of residence if the property is rented out than you will need to pay land tax with the exception that if it’s an investment property or a holiday home (second home) or a block of land, these are still liable to land tax even if they are not rented out.

Land tax is calculated based on the Unimproved Value of the land (not property value) held on the one day and they are all different from State to State

If you have properties in different States than you need to assess your Land Tax Liability (if any) based on the aggregation of properties per State.

 ASSESSMENT DATES

1.    31st December NSW, VICTORIA,

2.    30th June QUEENSLAND, TASMANIA, WESTERN AUSTRALIA, SOUTH AUSTRALIA,

3.    ACT has 4 quarterly dates 1st July, 1st October, 1st January, 1st April

If you owned property on that one day than you are liable to pay land tax for the following full 12 months with exception of ACT.

1.    31st December 2013. Liable for land tax from 1st January 2014 to 30th December 2014

2.    30th June 2013. Liable for land tax from 1st July 2013 to 29th June 2014

Land tax is generally payable for land values (not property values) above the Land Tax Threshold.

Each State have their own Land Tax Thresholds and if you are under the land tax threshold there is no land tax to pay for that State.

Each State taxes Trusts in a different way also and there are many different types of Trusts and they are all treated differently for Land Tax purposes, so let’s look at them:

NEW SOUTH WALES – INDIVIDUALS, COMPANIES & SUPERFUNDS

$0 – $412,000                        $0

Above $412,000                   $100 plus 1.6% up to the premium threshold

Premium Threshold    $2,519,000 and over  $33,812 for the first $2,519,000 plus 2% over that

NEW SOUTH WALES – TRUSTS

No Land Tax Threshold unless it’s a Fixed Trust

Disclaimer: Please refer to the Office of State Revenue for a comprehensive detail of which Trusts are exempt as its beyond the scope of this article to cover off on every different situation

QUEENSLAND – INDIVIDUALS

$0–$599,999 $0
$600,000–$999,999 $500 plus 1 cent for each $ more than $600,000
$1,000,000–$2,999,999 $4,500 plus 1.65 cents for each $ more than $1,000,000
$3,000,000–$4,999,999 $37,500 plus 1.25 cents for each $ more than $3,000,000
$5,000,000 and over $62,500 plus 1.75 cents for each $ more than $5,000,000

QUEENSLAND – TRUSTS, COMPANIES

$0–$349,999 $0
$350,000–$2,249,999 $1,450 plus 1.7 cents for each $ more than $350,000
$2,250,000–$4,999,999 $33,750 plus 1.5 cents for each $ more than $2,250,000
$5,000,000 and over $75,000 plus 2.0 cents for each $ more than $5,000,000

Disclaimer: Please refer to the Office of State Revenue  for more details

WESTERN AUSTRALIA

$0 – $300,000                                       $0

$300,000 – $1,000,000                      0.10 cent for each $1 in excess of $300,000

$1,000,000 – $2,200,000                  $700 + 0.53 cent for each $1 in excess of $1,000,000

$2,200,000 – $5,500,000                  $7,060 + 1.37 cents for each $1 in excess of $2,200,000

$5,500,000 – $11,000,000                 $52,270 + 1.64 cents for each $1 in excess of $5,500,000

$11,000,000 – upwards                      $142,470 + 2.43 cents for each $1 in excess of $11,000,000

Disclaimer: Please refer to the Office of State Revenue  for more details

VICTORIA – INDIVIDUALS

< $250,000 Nil
$250,000 to < $600,000 $275 plus 0.2% of amount > $250,000
$600,000 to < $1,000,000 $975 plus 0.5% of amount > $600,000
$1,000,000 to < $1,800,000 $2,975 plus 0.8% of amount > $1,000,000
$1,800,000 to < $3,000,000 $9,375 plus 1.3% of amount > $1,800,000
$3,000,000 and over $24,975 plus 2.25% of amount > $3,000,000

VICTORIA – TRUSTS

<$25,000 Nil
$25,000 to < $250,000 $82 plus 0.375% of amount > $25,000
$250,000 to < $600,000 $926 plus 0.575% of amount > $250,000
$600,000 to < $1,000,000 $2,938 plus 0.875% of amount > $600,000
$1,000,000 to < $1,800,000 $6,438 plus 1.175% of amount > $1,000,000
$1,800,000 to < $3,000,000 $15,838 plus 0.7614%* of amount > $1,800,000
$3,000,000 and over $24,975 plus 2.25% of amount >$3,000,000

 Disclaimer: Please refer to the Office of State Revenue for more details

SOUTH AUSTRALIA

Up to $316,000                              Nil

$316,001 to $579,000                   $ 0.50 for every $100 or fractional part of $100 over $316,000

$579,001 to $842,000                  $ 1,315.00 plus $1.65 for every $100 or fractional part of $100 over $579,000

$842,001 to $1,052,000               $ 5,654.50 plus $2.40 for every $100 or fractional part of $100 over $842,000

Over $1,052,000                             $10,694.50 plus $3.70 for every $100 or fractional part of $100 over $1,052,000

Disclaimer: Please refer to the Office of State Revenue  for more details

A.C.T.

$1 – $75,000  0.60%

$75,001 – $150,000  0.70%

$150,001 – $275,000           0.89%

$275,001 and above           1.80%

Disclaimer: Please refer to the Office of State Revenue for more details

TASMANIA

$0 – $24 999                                    Nil

$25 000 – $349 999                       $50 plus 0.55% of value above $25 000

$350 000 and above                        $1 837.50 plus 1.5% of value above $350 000

Disclaimer: Please refer to the Office of State Revenue for more details

Disclaimer: the above is general information only. Please refer to the website for each State to determine accuracy of the information. Also each persons circumstances are different and one should refer to one’s own Accountant to determine the correct information that is specific for your individual circumstances.

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Ed Chan

About

Ed is a founding partner of Chan and Naylor accountants and a leading property tax specialist. He has co-authored 3 best selling books. As a seasoned property investor he shares his unique understanding of the relationship between property investment and tax. Visit www.Chan-Naylor.com.au


'Understand Your Land Tax Obligations – Ed Chan' have 2 comments

  1. January 24, 2014 @ 12:23 pm Pratik

    Thanks Ed for sharing the information.
    One question that I have is – I read that you mentioned “Land Tax Liabilty is based on the aggregation of lands in a state”

    Does that imply that land tax calculation will done upon individual land valuation or aggregate? For example If I have two lands worth 400000 each in NSW then individually I am still below threshold of 412K but in combination will be well overboard.

    Can you please clarify?

    Thanks

    Reply

    • January 29, 2014 @ 10:35 am Luke

      I have some in wa and i believe it is aggregated LAND value so a 412k property may have a Land value of say 200K you can get a rough idea from your council land rates as it will have undeveloped land value that the rates are worked out on. So in my circumstance my land values put me over the threshold, and a very helpful tip is to buy in a trust structure, as this seperates you from the property and makes the trust liable for for anything over the threshhold.

      I had a massive bill for land tax I queried it as 3 properties were bought in a trust and it brought my bill down to 1200 for me and 800 for the trust. otherwise if all in my name it was thousands! However trust negitive gearing can only be offset against earnings.

      Reply


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