Land Tax - South Australia

Discussion in 'Accounting & Tax' started by Ponty, 10th Nov, 2015.

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  1. Ponty

    Ponty Member

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    HELP! I am in need of some guidance. I have just had a Land Tax bill for over $5000.

    If I explain briefly my circumstances. We (hubby and I) bought a house in July 2013 which needed total renovating. Renovations took 12 months. We stayed in the house on weekends and holidays and both our children stayed at the house occasionally. We did not live in the house permanently because we both work and live at our jobs, and it is a requirement of my husband to live at his job.

    This March we purchased another house which needed minor renovation work ie new bathroom, kitchen, decorating, new deck and garden clearance, this house has never been occupied by ourselves or any tenants.

    The First property we rented out in May this year for 6 months just to help pay the mortgage etc, whilst we were renovating property no. 2.

    I have paid CT, Water Rates, Gas, Electricity etc for both properties, the only time I have not paid Gas and Electricity for the first property is when we rented the property out from the 1 May ’15 – 30th October.


    Do I have to pay Land Tax for both properties, and this much??

    Any advice greatly appreciated.
     
  2. D.T.

    D.T. Specialist Property Manager Business Member

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    To have a land tax bill of $5000, you need an unimproved combined land value of about $825,000. This excludes the building value, ie is land component only.

    To get that in 2 properties they must be fairly significant value, especially for South Australia's standards.

    So, if you didn't live in them, then yes you have to pay. Only the PPOR (Principal Place Of Residence) gets an exemption.

    Main question will be - are both properties 50/50 ownership between the 2 of you?

    Options available might be
    1) Try to claim one as your PPOR - you'll need to prove you moved there and lived there
    2) Potentially challenge the valuation of the properties, since the tax is calculated based on its value
    3) Seek advice on whether you can change ownership - one of them to 100% your name and the other 100% your partners name or into a trust... each person or entity has a $323k threshold of land value where 0 land tax is calculated. This won't change the existing bill but will make next years bill easier to swallow.
    4) Seek advice on where/how you should buy future properties from now on.
     
  3. Ponty

    Ponty Member

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    Yes properties are 50/50. What proof will they need to prove we were living there? We have done major renovations on the 1st property, new roof, aircon, rewired, walls, floors, ceilings. It is our retirement home. The second property we bought as an investment but are unsure now if to keep it or not. Taxable site value is 385,000 and 430,000 on the Land Tax Assessment.
     
  4. D.T.

    D.T. Specialist Property Manager Business Member

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    Seems I was pretty close with my estimate? :) Based on those values - if you had bought one 100% in one name and the other 100% in the others name, your land tax would be $1k instead of $5k.

    There's information about exemptions here Exemption from Land Tax - RevenueSA but I'm not sure if you'll be eligible for any. Perhaps run it by your accountant.
     
  5. Ponty

    Ponty Member

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    It seems so unfair, bearing in mind it is a requirement of my husband's job to live on site 24/7. One day we will have to retire and leave our jobs and go and live somewhere.

    Thank you DT for your advice I will contact our Accountant.
     
  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

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    The conventional definition used in Land Tax laws across Australia refers to occupancy as a principal residence. (Varies from state to state but is generally similar)

    Moving and to stay and staying there for convenience at times are very different. The lack of continuity and other factors allow OSR to impose land tax if you do not satisfy the exemption.
     
  7. Ponty

    Ponty Member

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    Thank you for your comments. How do people manage if they have to live away from home for a period of time. All we are trying to do is have a home to retire to. I also work for the school as a Housemother and have every other weekend off, which is when we stay down the house. It just seems so unfair that we can't have a principal home because we cannot live their permanently.
     
  8. D.T.

    D.T. Specialist Property Manager Business Member

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    They get advice before buying so as to buy in the correct persons name or structure / entity.
     
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  9. John Faughner

    John Faughner New Member

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    just perusing land tax in SA....currently land other than POR is taxed when sum total reaches $353 K. Am I right in saying that if I hold property (other than PPOR) in my name, my wife holds property in her name, and hold a third lot of property in joint names, then unless total in each instance is over $353 K, we are not liable for tax? Is land tax a real big issue to be concerned with anyhow? Can it be claimed as a holding cost at tax time? Getting ready to purchase another IP, might have to be interstate this time.......
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    @John Faughner - purchases in another state won't attract land tax until younger that state's threshold.
     
  11. D.T.

    D.T. Specialist Property Manager Business Member

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    The stuff in joint names will contribute half (assume half half ownership?) To each persons individual tally. Joint ownership is bad news in SA from a land tax perspective.

    Best bet (for minimum land tax) is 350k in your name, then spouse's name then each of your trusts.
     
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  12. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

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    Lets look at the OP comments :

    We (hubby and I) bought a house in July 2013 which needed total renovating. This implied it was not habitable and doesnt mention if you commenced to reside in it from day one as your principal place of residence. ie You moved all family and belonging in.

    Renovations took 12 months. We stayed in the house on weekends and holidays and both our children stayed at the house occasionally. Admission. Its wasnt your principal place of residence. You and you possessions were elsewhere. So its not exempt property.

    We did not live in the house permanently because we both work and live at our jobs, and it is a requirement of my husband to live at his job. You may have an issue if you are both FIFO workers and you are merely absent. I am confused by the contradiction that indicated you live at work but may not be required to do so.

    Its possible your principal residence is not the property you own. It may be where your work and you have never commenced to reside in the property. Your comment that you plan to retire there may be a future intent and not a present fact.

    The CGT main residence exemption may also not be met. Hard to see how a property you live in on a weekend is a MAIN residence. You may need more detailed tax and legal advice on this issue
     
    Terry_w likes this.