Land tax and trusts

Hi, When two or more people own property held in a trust, how is the land tax proportioned.

Cheers

Wayne

 

As the trust owns the property, the land tax is apportioned 100% to the trust. The trust pays the land tax and it is entered onto its set of books.

 

If one trust beneficiary has additional land interest (NSW) will both land tax assessments be combined and potentially impact threshold.

 

Depends on a lot of things.

In NSW generally taxed at 1.6% of land owned each each

 

But how can 2 or people own property held in a trust? What's the situation

 

Beneficiaries being unit holders.
I understand a trust (NSW) will be subject to a land tax assessment, how is the assessment passed on to beneficiaries.

 

If fixed trust unit holders should register

 

The trust is a fixed unit trust, holding two properties.

 

Not good for one fixed trust to own more than 1 property.

 

Very silly. NEVER put two properties in a fixed trust. Horrible CGT outcomes happen.

 

Here is why...

Trust buys two properties that each cost $100. Five years after one is a dog and valued at $99 and the other worth $200. Trust decides to sell one. The $99 one is typically chosen to avoid realising a gain.

So what happens for tax purposes ? A $1k CGT loss right ?

Not really. The Trust makes a $1k CGT loss and and so no trust tax issues truly arise. BUT the unitholders are where the problem occurs. Trusts must redeem that unit interest after the sale and so market value of the trust immediately prior to the sale was $299 and lets assume 200 issued units. (A clause regarding market value is required for tax!) So a $99 capital gain occurs across the 100 redeemed units for the unitholder/s.

Trust units cannot be attributable to a specific unit of trust property. They are a right to a trust interest as a whole.

 

Would the same outcome mentioned above happened if the OP had a non-fixed unit trust holding 2 properties instead of a fixed one?

 

Very similar.