Any tax tips for reducing land tax?

I'm posting on behalf of a friend who owns a few houses outright.. He is having to pay land tax and we're trying to find a good tax solution.. I guess it's a good problem to have but still a problem

Can anyone suggest any methods of reducing land tax?

@Terry_w would you happen to have any tax tips for this that I haven't seen yet? I've tried looking through your tax tips posts but can't seem to find anything.


-Frank

 

Frank, it does not matter whether the houses are owned outright or they have a mortgage on them. Land Tax is calculated on the VG's valuation of the land as at 31 December each year. There are no strategies to reduce land tax other than not owning so much property or challenging the VG's valuation (and hopefully getting a lower val). I consider it a cost of doing business.

 

So nothing? Not even ways to reduce by having property in a trust, for children maybe, or by forming a company? I'm not very tax savvy so really have no idea.

My friend did see an accountant and the accountant suggested to buy shares instead of houses Which I guess works..

I suppose he could buy units.. Less land value with that.


-Frank

 

In various states and territories, trusts and companies get no land tax free thresholds compared with owning in your own name. Transferring into different entities at this point will cost stamp duty and possibly trigger CGT events.

 

Not much can be done with existing properties, other than to live in one.

Transferring to a trustee or company would involve CGT and stamp duty. Spousal transfers may be a limited option depending on a lot of things.

Which states are the properties in?

 

Hi Terry..

Properties are in Sydney..


-Frank

 

Buy across the ditch

 

In NSW land tax can be saved by owning separately rather than jointly.

Tax Tip 30: How to Minimise land tax in NSW Tax Tip 30: How to Minimise land tax in NSW

 

Excellent thank you! I knew you had a tax tip for this somewhere


-Frank

 

Frank pal, come on now...

 

How long will it take to recoup the cost of transferring to another entity (stamp duty, CGT, legals etc) compared to the amount of land tax to be saved?

 

If you built retaining walls around your property, filled it with water and plunked a house boat in the middle would you not avoid land tax as you now don't own land but rather a large brown swimming pool?

Just thinking outside the box.

 

about as long as that piece of string.

I did some analysis for a client where there was no CGT, they sold a former main residence to a trust, and it was around 5 years.

 

With my background being Greek, I would advise ... just don't pay.

 

In essence, false economy ie get it right at the start and get each future property set up correctly.

 

If you don't want to pay land tax, don't buy land!

 

Just to clarify.

 

Well, yes! Don't buy land in Oz.

 

PropertIES seems a problem for land tax in Sydney. Personal advice ?