Land Tax (Wrongful Exemption?)

Hello,

First time poster - long time "watcher"!

I own a 17 room boarding house (NSW) and I have leased it under a long term commercial lease to an individual as a boarding house for their use. Everything was ticking away fine for several years until the middle of last year. My tenant had to sublet to another operator since middle of last year. That subtenant is now having trouble paying their rent as I gather. My tenant and his subtenant are now back and forth disputing some things. One of these things which affects me is that the subtenant now says he was pressured by my tenant to give provide information that was incorrect in regards to the long term nature of the tenants (apparrently half the building was an airbnb) and the amount of rent they paid to enable the land tax exemption. Under the commercial lease to me they are liable for the land tax if payable anyway but they are 3 months behind on the rent to me! I have their personal guarantee. The subtenant says my tenant has gone ahead and given me wrong information and wants to report this. In addition, they've provided evidence of booking.com and airbnb listings going back several years by my tenant...

From what I gather the subtenant wants out but has arrears to my tenant.

Has anyone been in this situation before and dealt with the Revenue NSW on this issue?

 

The sub-lessee has no relationship with the lessor (unless the lease & sub-lease provide step-up rights).

You need specific legal advice as to whether you you are liable for a misrepresentation by a third party.

Does the exemption for land tax on boarding houses extend to a lessee &/or the subleasee?

That's your tenant's issue (but ultimately yours if the tenant subsequently fails to honour the lease).

 

I have familiarity with OSR and land tax attributable to boarding houses. I hope the property is a REGISTERED boarding house under NSW law. Otherwise this could get painful. And if its short stay rented it will be nasty. The owner is always liable for land tax on assessment. The property use is considered for exemption as a boarding house and the low cost provider status but this must be applied for and in absence of application and approval it is not exempt or given any concessions. This can also cascade to council and a range of issues. OSR have a mandate to report boarding dwelling to councils and it can get nasty if its not an approved and registered dwelling.

 

Hi,

Thank you for your feedback. I will find out RE: misrep by tenant but he hasn't mentioned this when I spoke to him so I'll bring this up. Under the lease I have with the tenant they are liable to pay the land tax. Under the subtenant's lease with my tenant they've used an RTA agreement which has no mention of land tax...

This is indeed a registered boarding house. Does the Airbnb issue still have consequences here re: council?

If Revenue NSW determines no applicable exemption what then happens? Penalties? Payment plan?

 

Land tax has nothing to do with the tenant or management. Its a responsibility for and assessed to a land owner but with a leased premises the lessee must maintain the standards to avoid you being assessed or in breach. Any arrangements for management and subletting must be carefully managed to avoid breach. Yes the Airbnb issue will mean the council will have a issue with use as a short stay. Do you know the difference between a NSW registered boarding house and accomodation ??

A RBH doesnt have tenants. None can have a lease. They occupy under a license and for a RBH it needs to be meals and accomodation with live in management. I suspect your council will have issues. Its not City of Sydney I hope. The very simplest issue here is the land tax. Its likely not exempt. And they may backdate this. Council could evict everyone. Council have very broad powers for RBH to walk in and inspect and do all sorts of things like evict.

IMO you need a specialist lawyer.