ACT Calculating Land Tax and Rates for Townhouse (Strata title)

Discussion in 'Where to Buy' started by vanica_castle, 2nd Apr, 2018.

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  1. vanica_castle

    vanica_castle Member

    Joined:
    2nd Apr, 2018
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    Location:
    harrison
    Hello peoples,
    I came upon this forum by googling canberra land tax.

    I am confused about how land tax and rates are calculated for a strata titled property.

    We live in a block with 95 strata titled townhouses in Harrison. The total size is 1 hectare 2000m2; 12000m2

    On the ACT revenue calculator website it tells me to enter the Unimproved Land value. Is this value calculated as 12000 x the rate. On the http://mmo.com.au/wp-content/uploads/2017/11/UV-Data-Report-FINAL.pdf website , I can find the approximate $/m2 for land in different suburbs.

    Based on that it is $600/m2. Thus the total unimproved value should be approximately 600*12000= $7,200,000.

    The next part is what confuses me on how strata'd tax rates is calculated. I calculated in 3 ways below and would like to know which is correct.

    Calculation 1
    Enter $7,200,000 into the revenue calculator. The total land rate and tax is $121,916. Each unit owner would pay $1283 of land rate and tax per year.

    Calculation 2
    If I enter $7,200,000/95 = $75,789 into the revenue calculator then the total land rate and tax is $2837. I am pretty sure this is incorrect.

    Calculation 3
    This is based on the formula on the revenue website.

    Unit properties = fixed charge + (AUV x unit entitlement percentage x rating factor)

    Unit entitlement rate would be 1 unit out of 95 total units = 1/95
    rating factor = 0.6013% = 0.006013

    = $765 + 7,200,000 x (1/95) x 0.006013 = $1220

    This should be the same as Calculation 1 but that's probably because i am missing some other Levies etc.

    Can you please confirm that Calculation 3 is correct?

    We are going to rent out our property and move back to Sydney and need to truly understand how much land rate and tax we actually need to pay. If it is too much then we would probably just sell it off instead of keeping it as an investment property

    Cheers,
     
  2. thatbum

    thatbum Well-Known Member

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    Lots of problems with your numbers. You can't use an average suburb sqm rate to figure out land value for one.

    Also, do all the 95 units have the same unit entitlement?
     
  3. vanica_castle

    vanica_castle Member

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    Whilst the numbers are wrong are calculations roughly correct?
    The 95 units don't have the same entitlement. There are a mix of different configurations. 8 units have double garages, 4 with double garages and additional garden space, 40 or so without a garage but with a car spot.

    I looked through my strata contract and there is no information about entitlement. Is this something only the conveyancer can find out?

    Based on Canberra's ACTiMAP website the valuation is $6.7 million for the block of land. This should be more accurate than the average $/m2 from the other website.
     
  4. Todd

    Todd Well-Known Member

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    Canberra
    I have 2 x IP's (apartments in Braddon) and this is how i understand the calculation which is explained (poorly) on my latest land tax statement.
    - The AUV for our block is $2,889,000. There are 22 units and my "unit entitlement" is 4.8% of the total block (i have a 2 bed apartment so entitlement slightly higher than a 1 bed). If you have 1 apartment in a block of 95 equal sized dwellings, you have 1.05% of the residential allotment on the site.
    - As your block is valued over 2 million, your marginal rate will be 1.1% per annum.
    - There is also a "minimum fixed charge" of $1,145 per dwelling which applies to all land taxable properties in the ACT (any property that is rented out basically).
    Therefore this is how you calculate it:
    Step 1 -$7,200,000 (AUV) x 1.1% (Marginal rate) = $79,200.
    Step 2 - $79,200 x 1.05% (your share) = $831.60
    Step 3 - $1,145 (minimum charge) + $831.60 = $1,976.60 would be your annual land tax bill.
    I did this calculation on one of my properties and it worked out exactly.
    Points to note:
    - Is your valuation of $7,200,000 correct?
    - Is your unit entitlement 1.05%? ie are all the 95 properties the same size?
     
  5. Todd

    Todd Well-Known Member

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    Don't forget rates, property management fees (about 8%), body corp rates, water and sewerage charge (around $640 usually). Most investors looking at holding costs of 8k approx in the ACT with an apartment or townhouse that is strata. But depreciation on a newish townhouse should be around 7-10k per annum so that helps.
     
  6. vanica_castle

    vanica_castle Member

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    Thanks Todd,
    The only value I got in from the ACT land valuation map ACTiMAPi. This came out as $6.7 million. The entitlement I have no idea what that is - my first guess was 1/95 but there are different units with different sizes / land / garages / levels etc. Hence the rate is not 1.05%.

    Also where did you obtain $1145 and 1.1% from? This looks different than on the ACT revenue website.

    Who should I ask for this information. Would this be something strata would know?

    Canberra is very confusing lol!

    Cheers,
    Van
     
  7. vanica_castle

    vanica_castle Member

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    Actually my bad, Just stumbled upon Land tax
    This says $1145 and the 1.1%
     
  8. Todd

    Todd Well-Known Member

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    I got the $1,145 and the 1.1% on my Land tax assessment statement from the first quarter of 2018 so i am sure it's 100% accurate. They also gave me the calculation formula i used above on the statement. But you do need to know the exact unit entitlement and the land value therefore if i was you i would actually just call Access Canberra and explain to them you want to know exactly what your land tax bill is as you are considering renting the property. They should be able to give you an exact amount! I doubt the strata manager will have these details but not sure.
     
  9. vanica_castle

    vanica_castle Member

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    Good stuff. I found it on the rates notice. We moved to Canberra in 2016 and moved into a brand new off the plan place. Currently we looking to rent it out and move back to Sydney but that entirely depends on how much these rates and tax rates amount to.

    Land value $6,700,000
    unit entitlement 1.23%

    Land Rate
    (Residential AUV of Master Property x Marginal Rates) x Unit Entitlement + Fixed Charge + Fire & Emergency Services Levy + Safer Families Levy -$100 rebate

    (6700000 x 0.006013) x 0.0123 + 765 + 294 = $1554.5 p.a.

    This isn't exactly as per the notice which is $1542.96 but close enough

    Land Tax
    ((Residential AUV of the Master Property x Marginal Rates) x Unit Entitlement + Fixed Charge) x percentage of the quarter.

    ((6700000 x 0.011) x 0.0123 + 1145) = $2051 p.a.

    Rental return (9% property management)
    =$450 x 52 x 0.91 = $21,294 p.a.
    This $450 is the average rental return in Harrison for a 3 bed townhouse.

    Strata and Water
    =$800 x 4 + 200 x 4 = $4000 p.a.

    Mortgage repayments
    =$460,000 x 0.8 x 0.0399 = $14,683 p.a.

    Profit / Loss
    = 1542.96 + 2051 + 4000 + 14683 - 21294 = $982 out of pocket


    Thanks guys for the help. I understand how this stuff is now calculated. $982 out of pocket is okay as long as the light rail will make it rise in value. Otherwise this is a waste of money to keep the property
     
  10. Todd

    Todd Well-Known Member

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    I live in Franklin and I think theses suburbs around Harrison have decent growth propspects, although not for apartments. A lot of infrastructure being built at the town centre should increase the demand for property close by. Plus light rail. I think 3 bed townhouses will do ok but houses better. Don't forget approx 8k depreciation gives you a loss of 9k approx. You will get roughly 35% back in a tax return (if salary around 90k). So you could be potentially 2k cashflow positive!!
     
  11. Toilandtrouble

    Toilandtrouble Well-Known Member

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    Just remember as it is lived in all fittings will sadly not be tax deductible.