Join Australia's most dynamic and respected property investment community

Land tax exemption clarification

Discussion in 'The Buying & Selling Process' started by Mumbai, 6th Apr, 2016.

  1. Mumbai

    Mumbai Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    763
    Location:
    Sydney
    Is it legally possible to buy another property to live in as primary residence, but still claim land tax exemption on the previous PPOR (which would be leased out)?
    I could not find details on OSR website.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,949
    Location:
    Sydney
    which state is the property located in?

    If NSW yes, but very tight conditions, see Schedule 1 of the land tax management act.
     
  3. Mumbai

    Mumbai Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    763
    Location:
    Sydney
    Yes, it's in NSW. I have read up the schedule, but couldn't figure out those tight conditions.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,949
    Location:
    Sydney
    basically you might be able to claim the main residence exemption if it is rented out for 6 months or less.
     
  5. Mumbai

    Mumbai Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    763
    Location:
    Sydney
    Ohh, I was planning to rent it out for a long term.
    Well, in that case I might have to buy out my spouse's share paying the stamp duty again, rather than paying 5k+ extra each year.
     
  6. Mumbai

    Mumbai Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    763
    Location:
    Sydney
    The calculations are getting my head in. Hope someone can make it easy for me.

    My average land values for properties in NSW. All owned as TIC.

    IP1: 346000
    IP2: 260000
    PPOR: 355667 (planning to change this to IP soon)

    Currently, I am paying around 2k+ land tax.
    Once, I convert the PPOR to IP3, I will incur land tax around 7k+

    Will transferring one of the properties from TIC to single title help to make the land tax hit a bit lower?
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,949
    Location:
    Sydney
    yes
     
  8. Mumbai

    Mumbai Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    763
    Location:
    Sydney
    Thanks Terry.

    Sorry to vex you (and anyone else, which is watching this thread), but I am still not very clear on how the land tax will be calculated with the new arrangement.

    At the moment, the taxable land value is $606000 (2 IPs) and threshold is $482000, so one entity (I and wife) pays $2k.
    I change the title on PPOR to myself and then convert into IP.
    Taxable land value for the joint owners will still be 606000, but for me it will be $606000 + the taxable land value of new IP. (I hope i got this part right)
    How does the threshold work in this case? How is that calculated and roughly how much it would be?
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,949
    Location:
    Sydney
    each person gets their own threshold. Joint purchasers are taxed as one person with the individuals getting a credit so that they are not double taxed.
     
  10. Mumbai

    Mumbai Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    763
    Location:
    Sydney
    Thanks again Terry. Makes sense.