Can land tax on IP's be claimed as a tax deduction?

Can I claim the land tax that I've paid during the year on IP's, or is it a "tax" and therefore it can't be claimed? Just wondering if the summary statements and amounts I've paid during the year on IP's should be given to my accountant at tax time?

 

My accountant has been claiming land tax for my IPs for some years so I assume it must be ok

 

Yes it is an expense which can be claimed - but only in the year it falls due

 

If the property is truly ava ilable and producing income at the land tax date it should be deductible. Land tax is applied AT a date and its purpose at that date must be considered

 

Hi Terry - Do you mean if I have a 2018 assessment where full payment is due in Sept 2018 then I can only claim in my 2019 return (even if it was paid in full in before 30/06/18?

Cheers

 

No, you could pay that earlier. I am referring to someone who may have had land tax liability from say 2012 but didn't pay it. If they pay in 2018 they could not claim that as it was due in 2012 tax year. They would need to go back and amend the previous tax return, which they could not do as out of time.

I once did a purchase where the vendor hadn't paid land tax for over 10 years and they had to pay it all at settlement - wasted deductions.

 

Thanks for clarifying

 

Could they not have been capitalised and offset on the capital gain? Hence not wasted

 

yes true, not completely wasted

 

Arrears of land tax` not claimed as a deduction may may the tax benefit is halved when a discounted CGT event occurs

 

The year it falls due, or the year it is paid? Land tax in Vic may be payable by 13 July (I think) but you would aim to pay by 30th June to get deduction. Is that an issue?

 

Land tax`is not considered incurred until the earlier of one of two events

1. It is assessed OR
2. The assessment is not raised due to arrears. The taxpayer can self assess their own liability. Hence the debt is incurred at the assessment date. Strangely the ATO ruling doesnt consider the assessment date as - THERE IS NOT ONE. There is no such thing as a uniform assessment date

Personally I have always felt this is a issue to appeal but nobody has ever done that, Can you self assess your rates and therefore prepay them - No

 

So when is it deemed to be assessed? The year they send you the bill presumably? But that bill is not payable until the next FY (mid July by memory).

 

So are there arrears or not. Re-read what I posted

eg 31 December 2018 year end in NSW. Assessments issued March - May 2019. However two tapayers

Peter ; reg for land tax. Get norice 29 May. Due date is 30 June. Deductible when paid
Paul : Not reg for land tax. Must claim in the 2019 tax`return or amend within typical 2 years or deduction is a potential third element CGT cost

 

No.

 

It is incurred when there is a liability to pay. The ATO's argument is that this is when it is an inescapable debt. If, for example, the OSR in nsw didn't know a company was acting as trustee they may not issue an assessment, thinking the threshold applied. But if it was trustee it would still have been liable for the debt even though an assessment had not been raised.

Tax Tip 8: Forgotten land Tax Tax Tip 8: Forgotten land Tax

 

In Vic, I get bill in ~May 18. Not payable until 13 July 18. I pay full amount on 30 June 18. Can I claim full deduction in the tax year ending 30th June 18?

 

Yes, because you are liable for the debt at that point.

 

Phew.

 

Apologies for commenting on an old thread but after a response to an example (from vic):
Investment property

2018 calendar year land tax assessment was 0 (became investment property ~ March 2018)
2019 land tax assessment was $1000.00

paid some land tax ($1,500) in Oct 0f 2017 for other property as paying instalments
Paid All Land tax in Jul 2019 for 2019 assessment

Do I

• Claim the full $1000.00 2019 assessment in the 18/19 tax return?
• Claim $500 in the 18/19 return and $500 in the 19/20 return?
• Claim the $1000.00 in the 19/20 return?

Thanks in advance.