Join Australia's most dynamic and respected property investment community

Land Tax for Company Structure

Discussion in 'Accounting & Tax' started by Tony Fleming, 4th Aug, 2015.

  1. Tony Fleming

    Tony Fleming Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    546
    Location:
    Sydney
    If buying through a non trading company is land tax still calculated at the same threshold as individuals?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,038
    Location:
    Sydney
    Depends on the state. In NSW yes. In QLD no - lower threshold.

    Also depends if company is acting as a trustee.
     
  3. Tony Fleming

    Tony Fleming Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    546
    Location:
    Sydney
    Excellent :) thanks terry
     
  4. Pistonbroke

    Pistonbroke Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    395
    Location:
    Guangzhou
    Does a company get the threshold in NSW?
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,038
    Location:
    Sydney
    Yep
     
  6. Pistonbroke

    Pistonbroke Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    395
    Location:
    Guangzhou
    Thanks, I thought that they missed out.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,038
    Location:
    Sydney
    Only if the company is acting as trustee - then no threshold.
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    ....Unless its a trustee for a Fixed Unit Trust and has disclosed all the required info to OSR NSW. These trusts MUST register or they lose the threshold.
     
  9. trinity168

    trinity168 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    404
    Location:
    Sydney
    How about SA?

    thanks
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,038
    Location:
    Sydney
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,038
    Location:
    Sydney
    Sorry - this topic is about companies so I assume you are referring to a company owning land - separate legal person so it would get its own threshold.

    Assuming not referring to company title
     
  12. trinity168

    trinity168 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    404
    Location:
    Sydney
    Thanks @Terry_w . Am trying to catch up on some reading about setting up trusts as we are looking to buy our 2nd IP in QLD.

    And, perhaps next year start buying in SA. Am getting ahead of myself.

    Am getting confused to getting the right structure for 2nd IP in QLD. First IP in QLD is under tenants in common for hubby and me.

    Cheers.
     
  13. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    I would understand the issues with a trust before seeing that the trust in QLD will save land tax $.
    - Harder for borrowing - Far fewer lenders
    - No future equity release unless the SAME trust buys more land
    - Lower t/hold than individuals
    - Cost
    - No changes to the trust without stamp duty

    $600K land tax t/hold or an individual = $1.2m of LAND for a couple. That's a lot of land in QLD before a trust is even on radar.
     
    trinity168 likes this.
  14. GreenGoblin

    GreenGoblin Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    74
    Location:
    Melbourne
    That post has put the brakes on for me, Paul! I thought we needed to set up a trust, but you've got me reconsidering. We own two IPs in Brisbane, one in my name (unimproved value $445k (3-yr ave $432k)), the other in my wife's name (unimproved value $375k (3-yr ave $300k)). We wanted to buy another two IPs there, but figured we'd need to set up a trust to try to minimise land tax. I know we still have some way to go to the $600k t/hold, but it ain't increasing, while land values are! I suppose we could buy one more house in joint names, to split the land value, but wouldn't we need a trust for IP #4 in Brisbane?
     
  15. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    Need ?? Much more to evaluate than just the expected land tax. The land tax may be less then the matters that arise through use of a trust.

    Two individuals have a $1.2m threshold.
     
  16. GreenGoblin

    GreenGoblin Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    74
    Location:
    Melbourne
    Yup, I understand the $1.2m threshold for a couple. The latest land valuations for our two IPs are a total of $820k (3-yr ave of $732), so that leaves $380k at 2015 values. I presume we could buy one more house with a land value of say $350k, but my wife and I will both be up for land tax as land valuations increase and the threshold remains unchanged. This also means that a fourth house as an IP will see us both up for land tax too.

    We could always buy townhouses/villas with less land content, though that just slows down the inevitable creep towards the land tax threshold. We could also buy in another state, though we feel Brisbane's the place to be investing in right now.

    We're not after asset protection and there's no children to leave the assets to; we're just trying to find a way to minimise the land tax payable within a relatively simple, cost effective structure (I know, it's the holy grail all property investors struggle to find).

    I realise that the cost of administering a trust would be similar to annual land tax bills initially, but at least that's a relatively capped cost, unlike land tax. Understanding that we'd have to discuss our situation in detail to get the right solution for us, do you have any general suggestions?
     
  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,038
    Location:
    Sydney
    GG have you considered all the other implications of setting up a trust to own property?
     
  18. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,400
    Location:
    Sydney
    One of the most effective strategies is to avoid pooling all IP ownership in one state. eg consider Coollangatta / Tweed ?

    I know its not Bris etc but if the values cycle in a similar manner (? perhaps not) then it could be a way to slip some land into a NSW t/hold