Hi, First time user, sorry if this has already been answered. Situation: My partner and I live at our parents house, we own the following IP1 - house, land value $1m, 50/50 ownership IP2 - land, land value $440k, 100% partner IP3 - house, land value $500k, 100% me All properties in NSW. Currently renting IP1,IP3. building on IP2 by end of year, plan to move in for 6 months and potentially sell or move back to parents, rent and claim 6 year rule. We havent registered for landtax, but received a land tax assessment over last 2 years for IP1 only. Few questions: 1. Reading online, my understanding is that each individual (even if married) has there own individual threshold for land tax purposes? hence we should be assessed as follows - partner (440 + 500 = 940k), me (500+500 = 1m). Though the assessment came in both names and only IP1? How does the 50/50 split factor into land tax? 2. IP2 is just land, no house yet, do I have to pay land tax on it? 3. IP2 was purchased as land with a 10% deposit and settled 2 years later, we have subsequently owned it as land for 2 years since settlement. Once I build at the end of this year, I assume we can move in for 6 months and sell it as PPOR tax-free? 4. We want to buy another IP also in NSW, I read that we can potentially setup a trust or SMSF thus have another threshold for landtax purposes, is this true? 5. I have been looking into the potential to develop IP1 into 3 townhouses though noticed similar developments nearby have each of the 3 townhouse land portions being worth 700-800k each - this will be a killer for land tax purposes. If I build and keep all 3 townhouses under 1 title does the land value stay at the original $1m? I assume this means I must own all 3 and cant sell them off individually? 6. As we currently have no PPOR (living at parents), lets say we move into IP1 - what do I have to do to make it my PPOR. Do I need to get it valued at the time we move in? If we knock it down and it takes 1 year to build, can I avoid paying land tax for that year?
NSW land tax is the most ridiculous as 2 people can own the same $$ of property in individual names and pay vastly different land tax. You get a bill for each entity. So you'll get 3 A- you - $500 + $500 B- Partne4 $440 + $500 C -joint $1m If you get a bill in both individual and joint you get a discount. I'm not sure how it works if land only, Someone else will answer that.
@Travelbug That not correct. NSW land tax doesnt provide duplicate thresholds. EACH owner gets one threshold (each). This can be based on what they personally own PLUS a share of jointly owned. If a joint assessmnet is issued over theshold then the personal assessmnet will also issue to add that share plus what they personaly own witha credit so there is no double tax. But likewise ONE threshold. Per individual.
Yes- That's what I said- EACH entity gets it's own threshold. If you buy a property with someone else- That is one entity. You as an individual is a separate entity. Since 2010 We have received a land tax bill for- 1- Myself 2- My husband and 3- In both names. ie- 3 bills. I rang and asked about this in 2010. That is how it was explained to me. Before we sold down we were paying in all entities. We got a discount because of that. Recently we only pay in the joint entity as our individual ones are below the limit.
2. yes. Unimporoved land value is counted. UNLESS it is exempt eg your own principal place ofresidence which you dont have. 3. Perhaps. 4. "Another PPOR"".. technically impossible. At any one time a family can have one actual PPOR. If you move from one to another the new home IS the PPOR. There is no choice unlike some CGT rules. 5. Developing is awhole different issue. The other entity might have its own theshold. That becuase it may won the land, not you. There would be tax consequences if a profit, loss etc occurs. Thesholds also vary. eg a disc trust in NSW gets a $0 threshold. The unimproved value of subdivided LAND often rises when split. So $1m of land could become three lots of $400K each. 6. No a valuation isnt permitted. First thing is you must occupy the property as your PPOR. Pro-rata apportioning works based on days exempt and days that are taxable - forever. The longer you live there the more dilute the investment period may be. If you KD the land wont stop being taxable unless it meets a exemption. Read Schedule 1A of the NSW Land Tax Management Act. A exemption is available for land intended as a future PPOR. There are rules and it must be applied for.
