How much Land Tax will I need to pay?

Discussion in 'Accounting & Tax' started by RubyRuby, 17th Jul, 2020.

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  1. RubyRuby

    RubyRuby Member

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    Hi all. I have moved interstate and have rented out my PPOR in NSW. The property has a land value of over 2.6M. I have used a land tax calculator and it comes to just over 30k.

    Here is my first question. Because my tenants moved in mid June 2020 I believe I will pay land tax in 2021. Will I have to pay the full 30k or will it be pro rata?

    My second question is. If my tenants pay rent for less than 6 months, I wont be up for any land tax in 2021. Is that correct? Is there a way I can avoid land tax for 2012? Eg rent free period, ending lease before the 6months and then starting a new one the next calendar year?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    1. Full
    2 perhaps
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Only If you are living in the property at the census date and for the 6 months prior (rented or vacant, doesn't matter for land tax).
     
  4. big_ben02

    big_ben02 Well-Known Member

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    If you don't purchase another ppor you could be exempt if you rent out your existing house for less than 6 months in a12 month period. I don't think giving discounted or rent free period would count
     
  5. big_ben02

    big_ben02 Well-Known Member

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    Living away from your home
    You may be able to claim an exemption if you move out of your main residence and live in a residence you do not own. You can claim the exemption for up to six years, or up to four years if you cannot live on the land eg due to renovation.

    To qualify, you must:

    • have lived there continuously for at least six months before moving away
    • not own another principal place of residence
    • only earn income from the property to cover basic property expenses such as rates, water and other amenities
    • not lease out your property for longer than six months in a calendar year.
    If you lease out your property for longer than six months, you’ll need to pay land tax in the following year unless you move back into the home before 31 December.
     
  6. RubyRuby

    RubyRuby Member

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  7. RubyRuby

    RubyRuby Member

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    Thanks it looks like im up for paying the land tax then. Will I have to pay the full 30k in 2021 even though it is rented out for 6 and half months in 2020?
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yep
     
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  9. [d4rk-fr3d]

    [d4rk-fr3d] Well-Known Member

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    if your tenant asking for rent reduction or moved out due to COVID-19, then you are eligible for 25% Land Tax discount: Apply for COVID-19 Land Tax relief | Service NSW
     
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    A tenant asking for rent reduction isnt what gives eligibility.
     
  11. [d4rk-fr3d]

    [d4rk-fr3d] Well-Known Member

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    OK, If there is evident in the Rental Statement that the rental income was reduced due to COVID-19, I assume we can just pay the 75% Land Tax (NSW) rate.
     
  12. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The rental statement wont be sufficient. OSR require you to apply and to submit evidence of an agreed rent reduction. If its resi the tenant must demonstrate to YOU that their family working income has also reduced. Deferred rent is excluded. A sad tenant story wont get a tax reduction. You need to submit evidence.
    Apply for COVID-19 Land Tax relief | Service NSW
     
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  13. [d4rk-fr3d]

    [d4rk-fr3d] Well-Known Member

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    Hi @Paul@PFI, does it mean the Property manager should get the tenant bank statement or any other statement of income even like Redundancy letter, Centrelink claims, etc.. ?

    which I should not have access to see the data due to privacy concerns?
     
  14. RubyRuby

    RubyRuby Member

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  15. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Then you may fail the requirements to satisfy OSR. OSR can provide guidance on what they expect
     
  16. Dogby

    Dogby Well-Known Member

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    If its okay to ask, how much has your rented this property for ?