Land tax at 43% of Gross Rent

Wow that is crazy...what is that as portion of rent?

 

Yeah, I know, but people are all over this sort of thing, it is like they do not care how much they lose as CG will never end, people can't get enough of the approx 1 mil properties that get 5-550/w rent, this sort of thing is still hot from what I see.

We will see how happy they all are once rates rise, rents stay flat, and CG is flat lining as well, it is not exactly cheap to get in or out either. Very real possibility of a pull back in there as well.

These places I talk of have zero dev potential either, nothing special.

 

About 13-14% - thanks to a couple of granny flats in the mix and 2 props in Sydney in a company structure. I'm no expert but from what I know, you can't keep setting up new shelf companies to own props in NSW.

Moving into one of my IPs will shave $13K off in one foul swoop.

 

No, I don't think I'll be selling anything touch wood. If there's one lesson Sydney has taught me, it's never sell unless you have to. I know too many people who cashed out for reasons like hefty land tax bills, only to sit on the sidelines and watch their ex-props go up exponentially after they sold.

It would be easier (for me) to consider selling in and reaping the windfall if my properties were scattered in the SW or West. But they're mostly in the East and Inner West, the Hills. the South (all decent, affluent areas). I know what it took to buy these and I'm not prepared to let them go as I'd probably never be able to buy back in even if I wanted to.

 

Feed meeee

Feed meeeeeeeeeeee

 

Aunty Gladys rocks.

 

I would always consider selling at the top to re structure or move money around, but I guess if that is not wanted or possible, then you know whats coming each year

 

Yep !

And better hope they do not think up the scheme Bob Carr and Co did when it came off in NSW before when they became reliant on this.

 

Hard to restructure now when you have to requalify for loans again. Some many no longer service.

 

You might be able to set up 2 before they are aggregated.

 

True that.

I would be pondering if it is worth it with that bill, I would look, at swapping security though....house for block of units on a small sub 300m block.....ups the cash flow, cuts the tax bill and still has you invested in syd.

Anyways, just ideas....may not suit, but that is ok.

 

If you could service ok then related party sales would be worth considering as this could be a part of an overall debt recycling strategy as well. It may even improve serviceability, asset protection etc too.

 

Playing the long game. Well done to you.

 

I've been tinkering with some spreadsheets i made recently. Specifically, calculating total stamp duty + 10 x annualised land tax years' payments (i just assumed a CPI inflation increase % each year that then cumulatively grows by year ten. CPI was added to both the value of property, land value, Land tax threshold, and Land tax %/$ rates per annum).

I did this first with a $300K purchase assumption ($200K of actual land value), then looked at what ten years down the track looked like for upfront stamps + 10-year land tax.

Some states/territories were horrific. Others presented an opportunity.

Those starting out ought to study this well as it may influence your long term buying strategy for state-spread.

 

Don't you have a PPOR already?

 

Correct. Under current serviceability calcs, I'd be lucky if I could buy a 1/4 of what I own (at today's prices).

 

You have to consider the swapping out costs as well - CGT, agents fees, stamp duty, property staging, holding costs whilst you sell, etc etc. There's leakages galore. All that to acquire a (possibly better) cashflow property that lacks the quality of location of the one it replaced.

And then, have to contend with today's lending environment where I MAY service to buy something at a fraction of the value of the property sold.

With the balance of those facts, the decision is simple. Hold.

 

This is what Chris Gray promotes. Cheap rent for an expensive residence.

 

No, we're renting at present. But one of the IPs we own is a house that's 5 mins away, so that's the one we plan to move into. The move was going to be imminent but I bought some time - so will probably move in end of 2018 at this stage.

 

I subscribe to this theory. And I've met Chris before and also spoke about my situation. In a lot of ways, our portfolio size, LVR, constitution and LT strategy is similar.