Land tax Victoria two PPORs

Discussion in 'Accounting & Tax' started by Burramys, 9th Nov, 2020.

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  1. Burramys

    Burramys Well-Known Member

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    A property was bought in late 2019. The situation went from
    Property A PPOR
    Property B bought late 2019
    to
    Property A renovated and then let
    Property B PPOR, moved in as soon as possible.

    This
    Principal place of residence (PPR) exemption from land tax | State Revenue Office
    says
    The principal place of residence exemption may be available for more than one property if the land is contiguous to (adjoining) the principal place of residence. It may also be available if the individual owner or vested beneficiary is moving between residences following the recent purchase of a new residence or sale of the previous residence.

    I cannot find a reference to precedents and how the State Revenue Office applies the above exemption. Advice on this point is sought. TIA.
     
  2. Trainee

    Trainee Well-Known Member

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    What was the situation on 31 Dec, exactly?
     
  3. Terry_w

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

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    Look at the source - the legislation, Part 4 of the Land Tax Act VIC
    s59 and surrounding sections

    LAND TAX ACT 2005 - SECT 59 Purchase of new principal residence
     
  4. Burramys

    Burramys Well-Known Member

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    Settlement was on 9 December 2019. The new property had renovations and was occupied from late January 2020. I have looked at s. 59 and cannot understand it.
     
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Unless the TWO properties are both adjoining, adjacent titles wihout boundaries to use and fencing and in use as a single lot then only one PPOR exemption will be permitted. There are also timing rules to a change of residence. Seek legal advice.
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Precedent ? This refers to common law. No statutory law applies and the Commisioners rulings
     
  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    It is likely not exempt.
     
  8. craigc

    craigc Well-Known Member

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    From Terry’s link,
    & also From the SRO link (Their interpretation) provided (you need to read down further):

    Purchase of a new principal place of residence

    An additional principal place of residence exemption is available where an individual owner or eligible trustee purchases new land to be used as a principal place of residence but, as at 31 December of the year before the assessment year, the owner or vested beneficiary has not yet moved out of their existing principal place of residence.

    In these circumstances, both the new principal place of residence and old principal place of residence will be exempt from land tax for that assessment year. However, the owner or trustee cannot derive any income from the new principal place of residence while it is not occupied as their principal place of residence.

    This additional exemption may be revoked if the individual owner or vested beneficiary does not move into the new principal place of residence within 12 months of its purchase and use the new land as their principal place of residence for at least six continuous months.


    I read this differently to Paul and believe it seems to have potential to be exempt. Again limited details RE your circumstances are provided and I’m not a legal expert, but for a ‘overlapping’ PPOR claim, if you move in as new PPOR within 12 months, don’t rent it out and stay there at least 6 months it would appear possible.

    I’m not a lawyer, nor duty expert and it will in the end come down to SRO interpretation unless you challenge it, but on the surface seems a good chance.

    @Paul@PFI - what part do you see the issue with?
    @Terry_w - thoughts? - as for a humble reader the legislation seems to match SRO website interpretation.

    Good luck either way OP!
     
  9. Terry_w

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

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    Yes 2 properties can potentially qualify as exempt from land tax. This is something that the op needs legal advice on - from a solicitor.
     
    craigc likes this.
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    And the exemption must be applied for. Many believe such matters are automatic. Until its applied for and given its taxable. Applying late can mean the concession is not given. Although they are fairly practical.

    This is why its not (yet) exempt ;)

    I have encountered one case where all the "facts" were similiar to the above (Vic). However the cert of occupancy was only issued on 3rd January. This new property was not exempt as it couldnt meet the definition of a residence on the taxing date. The taxpayer was surprised to receive the assessment two years later and was adamant it was his home. The solicitor objected and thats when it was discovered.
     
  11. Burramys

    Burramys Well-Known Member

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    Thanks, useful. The new PPOR was not rented, and a land tax assessment for either property has not been received. This could be due to SRO being slow. Until a year ago SRO sent out invoices in around May each year. In May 2019 I received two years of assessment in the same week. I'm advised that SRO has up to two years to send the notices. Hence, it may be necessary to wait for a year or more.
     

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