Land Tax Query

Discussion in 'Accounting & Tax' started by Laney, 27th Apr, 2020.

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Does a new family trust purchasing a property re-start the NSW land tax threshold?

  1. Yes, every new entity has its own $629,000 threshold.

    0 vote(s)
    0.0%
  2. No, the $383k investment land value in your personal name still counts towards your threshold.

    100.0%
  1. Laney

    Laney Member

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    My husband & I have an investment property in our personal names (land value $383,000) and we are now going to buy another property in a family trust that's owned by a company of which my husband and I will be corporate trustees. Because it's a new entity does the land tax NSW threshold ($629,000) re-start?
     
  2. Trainee

    Trainee Well-Known Member

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    What does your legal advisor say who recommended the trust?
     
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  3. Terry_w

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

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    $0 threshold for trustee owned properties for NSW land.
     
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  4. Terry_w

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

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  5. Laney

    Laney Member

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    Thanks Terry for confirming the threshold and sharing that thread.
     
  6. # 1

    # 1 Well-Known Member

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    I think the correct way is to say you and your husband will be directors of company ABC Pty Ltd who is the trustee for your trust, i.e. you and your husband cannot be corporate trustees.
     
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  7. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    A non-fixed trust (ie a disc trust) accesses a $0 threshold for land tax in NSW which means paying 1.6% on every single dollar of unimproved land value. Ouch. However that is full and final and no tracing to the individuals occurs unlike a unit trust which will. This can be very costly. The trust should immediately register for land tax aftre acquisition to avoid accumulated debt. The other major consideration is negative gearing. A disc trust cant neg gear a single property it owns but accumulates the loss and this may be very ineffcient. If the property is positively geared for income tax purposes then the tax consideration of distribution of this income is a further issue.

    There may be alternatives to using a discretionary trust which do provide a threshold eg company ownership. A company would also likely incur the issue of accumulated losses unless it has other sources of income but then that may indicate an asset protection issue. However, grouping may occur if this is repeated.
     
  8. Laney

    Laney Member

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    Thanks Paul, this is helpful.