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Land tax questions

Discussion in 'Accounting & Tax' started by QbiK Evolution, 9th May, 2016.

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  1. QbiK Evolution

    QbiK Evolution Well-Known Member

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    Hi everyone I wanted to ask some questions that I haven't seen answered here yet, sorry if they have been discussed before.

    If I have a property with a assessable value of 247k
    If I then split this into 3 properties would it be a simple matter of splitting that 247 into 3 separate entities?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You are confusing separate titles with separate ownership.
    If you transfer ownership to different entities it would result in CGT and stamp duty.

    You also haven't nominated where the land is.
     
  3. QbiK Evolution

    QbiK Evolution Well-Known Member

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    No sorry I'm not worried about stamp duty or anything. Properties would be split and kept in my original name.
    What I'm wondering about is technically is the assessable value of land.
    Will this increase by subdividing it.
     
  4. QbiK Evolution

    QbiK Evolution Well-Known Member

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    Sorry properties are all in WA
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    In that case the entity won't change, just the land will change. This will usually mean a increase in value - 3 titles will be worth more that 1, even though same size overall.
     
  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    A local agent opinion would indicate if the land will appreciate or devalue with a subdivision. They may also be knowledgable on the costs of doing this. The costs can be significant and may include survey, clearing, kerb, gutting, footpath, council fees and contributions, state govt fees and levies, sewer, water, recycled water, fencing etc
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    You go from having 1block with rights for 1 dwelling to 3 blocks with rights to build 3 dwellings (albeit smaller but with independent services connections).

    The sum of the parts will exceed the whole.
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Based on land price true. But once all the costs are factored in it may not be as profitable as first assumed. Many who seek to develop land to avoid building costs get surprised of the costs to dev land. One of these is the GST impact.
     
  9. QbiK Evolution

    QbiK Evolution Well-Known Member

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    Thanks for anwering my question. I have another on a more personal level.

    I'd like to ask a question about my land tax values.
    I'm over In Perth where prices in most areas have been struggling to not go backwards yet my rates have now also jumped.

    Property 1 went from 198 - > 247 = 24% increase
    Property 2 went from 148 - > 185 = 25% increase

    These two properties were on the same block and subdivided a number of years ago so I guess they just blanket through an increase over the entire area.

    Would I have grounds to appeal this?
    How can they suppose values have gone up that much when obviously they have not.

    One last question is my original land tax was issued Dec 2014 now my next one is April 2016. Is this a normal period I would of expected it to be 12 months or 18 month not 17.
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    @QbiK Evolution - what grounds do you think that you'd have to object?

    Values are based on a census date (not the same date as land tax)

    Council rates are based on a factor - this is multiplied by your land value.
     
  11. QbiK Evolution

    QbiK Evolution Well-Known Member

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    Sorry i dont understand.

    What do you mean values are based on a census date ?

    Also what do council rates have to do with land tax ?

    Lastly i was hoping to object to a raise in land value when clearly the last 5 + years there as been no raise in median house prices. Let alone a 25% raise, If there had id be more than happy to pay the tax. However im being taxed for an increase that has not happened.

     
  12. thatbum

    thatbum Well-Known Member

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    Did you mean council rates or land tax?
     
  13. thatbum

    thatbum Well-Known Member

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    The median house price has no relevance to land tax. Pretty much the sole ground you can object to an assessment is if they have valued your land incorrectly. Do you think they have?
     
  14. QbiK Evolution

    QbiK Evolution Well-Known Member

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    Im not talking about council rates at all.

    How do they value land then if they dont use a sale price. ?
    Seems to me that is the only metric for measuring a value of land.

    Land value = Sale price - improved value of structures ?
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    Council rates are based on your land value - if your land value has increased and the factor which council applies to calculate your rates has not moved in the opposite direction, your rates will rise. If the sky is red tomorrow morning, your rates will rise. If the sky is blue, your rates will increase too.

    The census date for land tax is the date at which they base the valuation. This is used across the board for all valuations in an area. Bulk valuation methods are used and they do not individually assess each property instead utilising statistical methodolgies. Unless your block is something special eg. waterfront with no improvements in an established suburb where there is a scarcity of vacant land (or whatever makes your block special), then it will fit into the basic statistical norm for your area.

    Council rates have nothing to do with land tax, they have a different census date and for different purposes.

    Statistical bulk valuation methodologies are used (see above). Real sales data is used to determine land value - if you dispute the valuation provided by the SVO, they will send your valuer the comparables which were used to guide the value they assessed.

    Point 1 in your initial post above was about council rates - but you're not concerned about council rates? I am confused.
     
  16. QbiK Evolution

    QbiK Evolution Well-Known Member

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    Ok sorry I just reread my post I used the term rates, it should of been values. I'm not worried about the council rates at all during this stage.
     
  17. Scott No Mates

    Scott No Mates Well-Known Member

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