Land tax claim - multiple owners

Discussion in 'Accounting & Tax' started by lazyhorse, 16th Aug, 2019.

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  1. lazyhorse

    lazyhorse Active Member

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    Hi All,

    Another question for the forum. My wife and I share ownership of a rental property, and my wife also has an additional rental property.

    Land tax liability for shared property is $100 on wife's land tax statement and $400.00 on our shared land tax statement

    Accountant is saying we should claim $250 each as property is 50/50 owned, I suggest it should be $300 for her, and $200 for me.

    Who is correct?
     
  2. Terry_w

    Terry_w Broker, Lawyer, Tax advisor, Debt Recycle advisor Business Member

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    Which works out best?
     
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  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    The jointly owned property will have a land tax expense of $400 as one of its deductions against that rent. The profit / loss is then shared 50/50 The other property will be solely in your wife's name. Any net profit or loss is all hers.

    What other option is there ? The accountant should know that. You need a new tax adviser. I was going to type - What a idiot. Hey I just did. Hate to think how he treats interest.
     
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  4. lazyhorse

    lazyhorse Active Member

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    Just to confirm - the 50/50 shared property appears on two statements. One in just my wife's name ($100.00) and one shared ($400) - so the total liability is $500.00 I just assumed that the land tax liability would not be shared.
     
  5. lazyhorse

    lazyhorse Active Member

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    I have the greater taxable income :)
     
  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Yes. Refer to my post. Land tax is incurred and would be a deduction against same property rental income. Net profit (ie aftre land tax is deducted) on each property is shared with each owner - profit or loss. So you cant claim her land tax.

    There is no other way.
     
  7. lazyhorse

    lazyhorse Active Member

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    She* - I think you replied to my other question yesterday re how to claim land tax. She was claiming it needs to be claimed in the year it is paid...

    Sorry, just to clear any confusion, am I correct in saying wife claims a deduction of $300 for land tax, and I claim a deduction of $200.00
     
  8. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Land tax is deductible in the year it is incurred. Doesnt need to be paid. Can be paid three yaers later it wont affect when its deductible...Excepting you cant claim after the period of time to amend has ended.

    If you pay your wifes land tax its only deductible to her, a legal owner.

    No.
    Each of you will have rental schedules in your return. You will have one and it will show half the rental income and half the costs including half the land tax on one property. Your wife will have TWO rental schedules. One showing half one property and the other 100%.

    So in effect you will have claimed $200 and she will have claimed $300. Against a 50% and 100% share of rental income respectively. You cant single out one cost and need to deal with rental expenses as part of the rental schedule for each property.
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

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    The accountant has the wrong information if the ownership is Wife:You = 1.5 : 0.5 Is he aware that the ownership isn't 50/50?
     
  10. lazyhorse

    lazyhorse Active Member

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    Yes, She is aware the ownership is not 50:50
     
  11. qak

    qak Well-Known Member

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    The she can't math.
     
  12. Dan Wood

    Dan Wood Well-Known Member

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    This sounds overcomplicated for what it is...
     
  13. lazyhorse

    lazyhorse Active Member

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    I do agree, what is $50 here and there. Just concerned about being accurate and knowing I am dealing with someone who does it right.
     
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  14. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I would argue any tax adviser who fails to understand a $50 land tax issue may struggle with the concept of who claims interest on a borrowing when the loan is in a single name vs in joint names on a property owned by just one person.

    The number of times a new client has had this issue and the client is surprised we need to amend is a concern.

    eg Fred owns a property. Mary and Fred are borrowers. Both have split the property 50/50. Incorrect. Fred and Mary own a property 50/50. Borrowings are in Freds name only. Fred has claimed all income and costs. Incorrect.

    We also sometimes find a QS report in the wrong taxpayer/s names. That shouldnt invalidate it but may indicate two concerns - 1, Its just 50% of the depreciation or 2. Its just got wrong names and maybe the tax splits are also wrong.

    Other one that I have seen is a tax adviser who tells clients that when they both own property the first years tax return allows them to chose a % share that remains - Like a partnership. So wrong.
     
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  15. lazyhorse

    lazyhorse Active Member

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    Still not sure I have conveyed the ownership and tax liability. So will try again:
    Land Tax Statement 1:
    Property 1: 100% Wife - Land Tax $1,000.00
    Property 2: 50% Wife - Land Tax $100.00
    Land Tax Statement 2:
    Property 2: Wife and Me - Land Tax $400.00
     
  16. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Property 2 has me stumped. Your wife owns 75% ?

    I believe I see it this way

    Land Tax Statement 1:
    Property A: 100% Wife - Land Tax $1,000.00
    Property B: 50% Wife - Land Tax $100.00
    Land Tax Statement 2:
    Property C: Wife and Me - Land Tax $400.00

    Therefore there will be THREE rental schedules.

    Wife's tax will show 100% of the cost for A + 50% of the income and 50% of the land tax cost etc for B plus she will also have aschedule for C and this would include 50% of the income and 50% of the land tax. So her total land tax cost is in effect $1250

    Not sure who owns the other 50% of B. But you will have a rental schedule for C with half the income and half costs incl land tax share of $200
     
  17. lazyhorse

    lazyhorse Active Member

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    Thanks for the reply Paul. There are only two properties involved.
    Edited as I can't work quotes :(

    She owns 50%, I own 50%.

    I own the other 50%. Not sure why property 2 appears on two statements - must be to do with the land tax table ranges - i.e. my value is below 600,00 and her's is above: Land tax current rates | State Revenue Office
     
    Last edited: 19th Aug, 2019