Anyone getting hard hit by absentee land taxes?

Wonder if it's making anyone reconsider owning property ...

 

Yes

 

Yes. If they are affected. Absentee land tax is a QLD issue and a defined concern. Other states (some) have equivalent issues

 

Which other states are you referring to?

 

NSW and VIC have similar issues ... Different terms but similiar for land tax and surcharges and duties. CGT laws have also been changed in 2012 and recently announced

 

Not me. Why would I deliberately keep a property vacant?

 

"absentee" is not the same as citizen "non-resident" is it? From what I have read I assume (/hope) not with NSW. 2% surcharge with no tax free threshold would be pretty dibilitating.

I understand the logic though to flush out foreign speculators, but locals living overseas shouldn't be penalised.

 

I am in currently in a country where non-citizens can not purchase land, so I would like to invest in my home country so that I have an income when I am older without having to rely on the pension. Seems they prefer I did not invest and instead took 20k/yr from govt for the last 20 years of my life instead. If they continue down this route I may oblige.

 

Each state and the Commonwealth uses different measures and tests. NSW does allow a citizen to escape the surcharge.

Proposed CGT changes would end CGT discounts and exemptions for persons who are citizens who leave Australia and take up residency elsewhere.

In NSW a discretionary trust can be subject to the land tax surcharge and duty if its not careful.

NSW Land tax / Surcharge and Duty rules are here : Land tax surcharge | Revenue NSW

 

Absentee as in non-resident. That means that you can rent a place out but still be considered an "absentee" for land tax purposes.

 

I see. For some reason I thought you were referring to the tax for vacant properties.

I am not concerned about the absentee land taxes personally because I am not planning on being a non-resident. Then, if I was a non-resident but bought property in Sydney or Melbourne in 2013/14, I would not care about the extra 1.5% or whatever while my property is doubling in value

Where property isn't rapidly increasing in price though, I would question why a non-resident would be wanting to hold that property. In that case, the absentee land tax surcharge would bother me, as would the lack of capital growth.

 

Because not everyone buys property to speculate.

 

The problem is that it doesnt target the foreign speculators. The so called 'penalty' is set at a low enough rate that only really penalizes a non resident citizen. Foreign buyers should prove a connection to the country IMO, especially for (or only) established properties.

Yeah, your situation is a particular bummer - I can relate being overseas, but I do not have the restriction that you do. In your situation, you might have no choice but find a state that's least 'bad' and bite the bullet there (if you didnt already) - its probably better than to walk away full stop.

 

Why would a non-resident buy residential property in Australia if not for capital growth? Certainly not for yield. Have you seen our yields lately? VAS has a better return with less risk, no repairs and no tenant hassles.

 

Connection to the country where their from (sentimental); diversity of a hard asset; diversity in a different currency; store of wealth; can be passed onto children, especially where their parent was from; seeing cheaper property value relative to where they currently live; future expectation that it will only get harder to buy as an NR etc etc.

Have you seen the yields in Switzerland?

Can I live in a VAS?

 

Well, I guess an absentee owner using property as a store of wealth is a bit less attractive with absentee owner surcharges being introduced. For example, in Victoria:

If your land attracts special land tax, you’ll pay an absentee owner flat rate of 6.5 per cent from 1 January 2017 (previously 5.5 per cent).​

This is my point. I was not suggesting that people should only "speculate" in property. My point is that if an absentee investor is being charged a flat rate of 6.5 per cent, they are going to want to see some capital growth to compensate for that. They don't have access to negative gearing, so losing money on a property year after year with no capital growth seems like not a very good "store of wealth" as you suggest.

Have you seen there are other countries in the world to invest in besides Switzerland and Australia?

Can you live in a house in another country? If you are living in Switzerland, how can you live in an IP that is located in Australia?

 

Are you talking about absentee owner or NR? (rhetorical). Because your initial post talks about one, but now you talk about the other. You seem to think they are one and the same.

No need for this really - so I will move on. As previously, your confusing speculation with a place to live either now or in the future (regardless of yield). This thread relates to Australia and applicable taxes.

 

You're confusing buying a place to live in now with the question of the thread which asked about "absentee land taxes". Absentee, meaning a property you are not living in.

So, the question is:

Anyone getting hard hit by absentee land taxes?

Wonder if it's making anyone reconsider owning property ...​

This is not in any way related to people buying a place to live in now.

And the answer is the answer I gave. A person buys a property in Australia but is living overseas for a time and is subject to absentee land taxes. This makes holding the property less attractive unless the property is increasing in price to compensate for the additional taxes paid. This applies regardless of whether the person plans to live in the property in the future. I'm not sure why this concept is difficult to understand.

 

They may already own the property. They may not want to sell.
The property could be intergenerational
A person may seek to return later

There is no single set of assumptions. I have some clients who are questioning selling AU property as its become very expensive to own. Previously yield paid income now yields are negative. Seems a bit unfair IMO.

I would prefer if the state tax exemption applied to a former resident for commonwealth income tax purposes rather than apply a citizen test (which is also Commlaw !!). Many people live here who arent citizens. Many people have lived here for 20, 30 years, 60 years and arent citizens.

They key message for some people is get citizenship (dual) and save tax. Your local O/seas consulate / embassy can assist

Australian citizenship

 

Absolutely, a lot of it is individual circumstance that could fill pages. Certainly a lot more complex than just a fixation on 'yield' -especially when it comes to homes which has more use than just being an investment.