Land tax

Discussion in 'Accounting & Tax' started by Hetty, 22nd Jul, 2017.

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  1. Hetty

    Hetty Well-Known Member

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    We bought two properties this financial year in Brisbane and these are our first investment properties. We did not receive land valuation notices in the mail and I'll chase this up on Monday. I have two questions! Is the land tax threshold divided between owners? the value of the land is about $830k according to: Annual land valuations released for Brisbane City Council area but we own the properties together (50/50) so will we stay under the $600k threshold and not have to pay any land tax? Sorry, I know I'm a total noob!

    Secondly, if we do have to pay land tax, do we pay a lesser amount as the properties were purchased during the financial year (one in October and one in January)?
     
    Hetty, 22nd Jul, 2017
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  2. wylie

    wylie Moderator Staff Member

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    It is divided between owners. So with total combined value of 800k you each will be under the threshold.

    And notices will come out maybe August but usually payment not required until November. Tax is based in what you own as at 30 June each year.

    The owner would have received the notice showing the increase (before you bought?)
     
    wylie, 22nd Jul, 2017
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  3. Hetty

    Hetty Well-Known Member

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    Thanks Wylie. I'm not sure about any notices the previous owner received, nothing was mentioned?!

    But... I just don't have to worry about it because we're under the threshold? So when we receive the notices no amount will be payable.
     
    Hetty, 22nd Jul, 2017
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  4. Bris Jay

    Bris Jay Well-Known Member

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    That's a bit crappy. If you settle on a property on 30th of June then you pay land tax for the full FY?
     
    Bris Jay, 22nd Jul, 2017
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  5. wylie

    wylie Moderator Staff Member

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    You will get a notice from OSR sometime soon showing what you own and how it is divided, and consequently, what you owe.

    You won't get a notice about the increase in value until the next time it happens. It is not something you will get when you purchase the house amongst the paperwork.
     
    wylie, 22nd Jul, 2017
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  6. wylie

    wylie Moderator Staff Member

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    The same happens in other states, but different dates I believe. Someone has to own property on a particular date. But yes, we recently sold and pushed forward the settlement to give the titles office enough time to change title from our name to the new owner.

    OSR staffer told me that settling on 29th June doesn't always mean we won't pay land tax if the title isn't changed. I thought if we didn't own a property on 30 June, we were safe, but not according to OSR.

    Usually it takes a week or more (sometimes several weeks or more) so I'm now waiting to see what happens with our land tax bill when it arrives.

    The information I got from OSR differed somewhat from what our solicitor told us, so I'm not sure who is correct. And the explanation on OSR site is not very clear either and seemed to contradict what I was told by a staffer there.

    I'm not going to worry about it until we get our next notice.
     
    wylie, 22nd Jul, 2017
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  7. Bris Jay

    Bris Jay Well-Known Member

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    I settled on one on the 16th of May so I'm sure it was there 30th of June.
     
    Bris Jay, 22nd Jul, 2017
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  8. Terry_w

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

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    You have the opportunity to avoid this by contracting for the vendor to pay their share and you your share.
     
    Terry_w, 22nd Jul, 2017
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  9. Bris Jay

    Bris Jay Well-Known Member

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    I had the opportunity. That boat has sailed my friend :cool:
     
    Bris Jay, 22nd Jul, 2017
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  10. Terry_w

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

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    Hi Wylie

    The owner at 30 June is liable, s 8 when the liability arises which is at midnight on 30 June s7.

    Owner is defined under s10 - which seems pretty vague. If title hadn't changed at 30th the previous owner is still the legal owner but not the equitable owner as this would cease at settlement.

    I wouldn't be surprised if they made the assessment to the registered owner at 30 June if the settlement went ahead before hand. But I would be surprised if they didn't rectify this when it was explained to them that the sale at settled prior to 30 June.

    Land Tax Act 2010
     
    Terry_w, 22nd Jul, 2017
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  11. Terry_w

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

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    Terry_w, 22nd Jul, 2017
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  12. Scott No Mates

    Scott No Mates Well-Known Member

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    Have you registered for land tax?
     
    Scott No Mates, 22nd Jul, 2017
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  13. Hetty

    Hetty Well-Known Member

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    You would hope most solicitors would pick up on a June settlement and put something on the settlement, not really fair if an owner for a few days has to fork out. I imagine a few get caught out by this!

    Should I wait to do my tax until I get the letter from OSR? I was planning on doing it tomorrow over the phone with my accountant. But with it being split we can't have a bill, right? So it shouldn't matter?
     
    Hetty, 22nd Jul, 2017
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  14. wylie

    wylie Moderator Staff Member

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    That's what I believe too Terry, but OSR had a different view and said it would depend what dates were written in on the Form 28 (might have that form name wrong), and when they "move in". It all seemed odd to me, and my SIL (lawyer) picked up from the website that we could argue the case if indeed the titles office was slow to change title out of our name.

    The OSR website differed to what the staffer told me. But like many legal things, it was not written to be really clear to a layman.

    With settlement being so close to 30 June, I did make a number of calls to OSR trying to clarify this, and the titles office to see how long it "should" take to change title out of our name. I made quite a few enquiries about it. The staffer from OSR who suggested that it depends on when the new owners "move in" I believe may have been wrong, because if they rented it out, they wouldn't "move in" at all. She did go away and ask a supervisor though, and the answer was the same.

    Anyway, our solicitor didn't seem concerned, and I know that the two dates on the particular form were one and the same, ie. moving in the same date as settlement.

    When we get our next notice, if we somehow find ourselves charged for the land tax we will certainly be fighting it.
     
    wylie, 22nd Jul, 2017
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  15. Hetty

    Hetty Well-Known Member

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    No, I did not realise this was a thing! Do I need to if I own properties but am under the threshold?
     
    Hetty, 22nd Jul, 2017
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  16. wylie

    wylie Moderator Staff Member

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    We've never done anything to register for land tax, but our notices have always been correct and never missed a property, so I'm assuming our solicitor has done something on our behalf, or somehow things are tied together behind the scenes?
     
    wylie, 22nd Jul, 2017
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  17. Hetty

    Hetty Well-Known Member

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    Perhaps mine did the same thing. We received letters from the two councils for our properties as we are investors we are liable for higher council rates, different level of government I know.. but maybe they've done State as well. I'll ring on Monday.
     
    Hetty, 22nd Jul, 2017
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  18. Scott No Mates

    Scott No Mates Well-Known Member

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    You have an obligation to register even if below the threshold.
     
    Scott No Mates, 22nd Jul, 2017
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  19. Hetty

    Hetty Well-Known Member

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    Thanks, good to know! I'll find out if I'm registered on Monday.
     
    Hetty, 22nd Jul, 2017
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  20. Terry_w

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

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    not sure what you mean by "put something on a settlement"? You would have had to enter into an agreement with the vendors so this would need to be in the contract you entered.

    Land tax is payable in advance too -s7.

    So a vendor would not want to pay your land tax for the rest of the year.
     
    Terry_w, 22nd Jul, 2017
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