Sorry if this is a little garbled, but I am confused...I'm wondering what peoples strategies are with regard to Land Tax? I have a PPOR in Sydney an IP in Melbourne (house) and and IP in Sydney (house) which is subject to land tax as it's a little over the threshold. I currently am looking at purchasing another IP, perhaps in Melbourne or Sydney, as I have researched a bit there. Was looking at Brisbane, but as many have mentioned on the forum it seems like little movement there. My question is for those who mention they have multiple properties in the same state... Are they under Trust Structures? When I have asked my mortgage broker about this they have mentioned rarely do any clients borrow in Trusts anymore. Although it seems some Sprukers (which I question & take at arms length after going to their seminar!) state it's the only way to purchase. Are people purchasing in SMSF? Manly apartments? Or just paying Land Tax as part of their strategies.Thoughts / insights would be great
People do different things. The laws differ from state to state so ways to minimise land tax in NSW differ from that in QLD. I suggest you decide where you are going to buy and get some legal advice just before signing contracts and decide the ownership entity then.
Each state has it's own threshold for property that you own in that state only - it is a state-based tax. The rules vary from state to state so a trust or SMSF may have a threshold in one state but not in another jurisdiction. Companies may also benefit from their own threshold. Refer to @Terry_w's land tax tips & strategies. Also consider the ongoing cost of establishing and managing different entities which may exceed any benefit that you seek to gain.
I got hit with a letter about a month ago asking for me to pay land tax. I myself have 3 properties in QLD. I have one property in SMSF which has it's own $600,000 threshold so no issues there. The other 2 properties i have one is my PPOR so these are exempt from land tax so it's just my IP and the land value for this is under 600K so i am in the clear for now.
Owning a property in a trust in VIC means you pay Land Tax for the entire value of the land (no threshold) So owning in a trust isn't a great strategy in terms of reducing Land Tax here. Is it different in other states?
$25,000 threshold for trusts in VIC. Then it starts are 0.32% Much better than NSW where trusts have $0 threshold and are taxed at 1.6% - $8,000 per year on a $500,000 property! Persons will get a $250,000 threshold then it starts at 0.20%
Wish they'd make all states rules the same. Would stop a lot of confusion and less rules to remember for those of us with properties across multiple states.
Land tax is high here in the ACT and so are PM costs (pretty cr@p PM’s too from my experience as a tenant but looking at it as a landlord). When we eventually pull up stumps and go back north we will most likely sell our current PPOR although it could rent out here as a dual occ. Land tax here still doesn’t make it worth it.
Refer to Terry's tips. Have you also considered buying in wife/husband name (if there is one). This may help in some states.
