Land tax liable joint owners

Discussion in 'Accounting & Tax' started by Mike10459333, 13th Apr, 2020.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Mike10459333

    Mike10459333 New Member

    Joined:
    13th Apr, 2020
    Posts:
    4
    Location:
    Sydney
    Hi all

    Hope you can assist and clarify below for me.

    Just like someone to confirm for me a question about land tax liable in nsw.

    Example
    If homer and Marge own two investment properties jointly totalling $1,500,000 land value. Is tax payable below calculation one or two below.

    Calculation one)
    ($1,500,000 minus $692,000) multiply by 1.6% = $12,928

    Calculation two)
    (1,500,000 multiple by 50% ownership) = $750,000

    ($750,000 minus $692,000) multiply by 1.6% = $928 liable for Marge and Homer.

    Note threshold is based on average and and for 2019. Location is Sydney.

    The reason I'm asking this question is on the revenue nsw website it has the following note. Since the properties are joint owned I'm not sure why I have not received two separate individual tax assessment as mentioned on their website.

    Assessment

    "You are assessed based on the total land value of all your interests in land, whether you own them as an individual or as a joint owner.

    For example, if you have a 50% interest in jointly owned land, your individual tax assessment will include 50% of that land plus 100% of any land you own individually.

    You will receive separate assessment notices for any jointly owned land."
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,841
    Location:
    Australia wide
    Whats the question?
     
  3. Mike10459333

    Mike10459333 New Member

    Joined:
    13th Apr, 2020
    Posts:
    4
    Location:
    Sydney
    Would the land tax payable be calculation one $12928 or calculation two $928. As both investment properties are jointly owned.

    Thanks
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,841
    Location:
    Australia wide
    They own $1.5mil worth of property? So the answer would be 1.
     
  5. Hetty

    Hetty Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    523
    Location:
    NSW
    I know we are talking NSW but in Queensland it’s #2 isn’t it? I can’t find anything like that for NSW. Taxable value of land
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,841
    Location:
    Australia wide
    Totally different laws in QLD. each joint owner is assessed on their share of the land whereas in NSW (in VIC) joint owners are assessed as one unit.
     
    Hetty likes this.
  7. Mike10459333

    Mike10459333 New Member

    Joined:
    13th Apr, 2020
    Posts:
    4
    Location:
    Sydney
    Would one method in minimising the land tax be to have one
     
  8. Mike10459333

    Mike10459333 New Member

    Joined:
    13th Apr, 2020
    Posts:
    4
    Location:
    Sydney
    So to minimise land tax would an option be to have owner one and owner two to have separate properties on it's own instead if buying properties jointly in nsw? Thanks
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    20,326
    Location:
    Sydney or NSW or Australia
    The correct answer is: $13,028 (calculated as LV - threshold + $100)

    Each corporeal owner (person) with an individually owned ip gets a separate threshold. Most types of trusts in NSW don't get a threshold.
     
    Last edited: 13th Apr, 2020
    Terry_w likes this.
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,841
    Location:
    Australia wide
    Yes, I have a tax tip on this in the tax section here.
     
  11. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    15,124
    Location:
    Sydney
    In the OP question he is confused by the issue of secondary assessments.

    In the example Homer and Marge own two NSW properties. Hence one assessment. But if Homer owned another he would receive a secondary assessment with his 50% share of 2 PLUS 100% of another with one threshold given. He would also receive a credit for 50% of the joint land tax.

    eg $750K for the joint share + $750K for his own property = $1.5m less $692K thershold = $808,000 x 1.6% + 100 = $13,028 less credit ($13028 joint assessment x 50%) = $6514 = $6514 Due. Total land tax payable on three properties is $13028 + $6514.

    So Homer wouldnt benefit from breaking land into joint and also personal ownership. But if Marge owned one and Homer owned one they could each duplicate a threshold. Until the threshold is met then its of no further benefit

    You pay tax based on the combined value of all taxable land you own, not on each individual property. If the combined value of your land does not exceed the threshold, no land tax is payable.
     
  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,841
    Location:
    Australia wide