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[NSW] land tax avoidable?

Discussion in 'Accounting & Tax' started by htopg, 31st Oct, 2015.

  1. htopg

    htopg Well-Known Member

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    Location:
    Sydney
    Currently I am living in my spouse home.
    I have IPs in NSW and I have reached NSW land tax threshold.

    I recently bought a property and would like to make it my PPOR (will move in with spouse).
    The settlement date is early December this year.
    Currently there is tenant in it.
    I have asked for vacant possession but it is possible that the tenant will not be able to move out on settlement date.
    Let's say the tenant leaves after 31/12/2015,
    Does that mean I will have to pay for land tax this year (as land tax assessment date for NSW is 31/12)?

    Let's say the tenant leaves a few days after settlement date,
    Does that mean I will have to apportion some days for capital gain purpose in the future when I sell (as I do not move in immediately after settlement)?

    Thanks in advance
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes you probably do. No apportioning, but the full amount.

    Even if they move out there is a requirement that you live there at least 6 months to avoid land tax - but the commissioner has the power to wave this 6 months requirement.

    probably best not to settle until they leave.
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Between you and partner only ONE PPOR exemption is permitted for land tax. It cant be shared or split. Its also fact based. On this basis the Commissioner would not consider a variation to the 6 months as its not available. The true exemption only can apply to the partners property. If you move into your property both may be taxable.

    Of course this is all subject to the land tax threshold and that you correctly register for land tax. Its not a automatic tax.

    For CGT purposes you always would have to apportion based on days where you did not reside in the property from the date it was acquired or as soon as practicable. A tenant leaving is not considered such a reason. This rule has more application to a property being constructed and also provides a period of tolerance when moving between properties rather than a strict and firm expectation of moving in on the day of settlement.
     
  4. htopg

    htopg Well-Known Member

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    Location:
    Sydney
    I rang OSR today.
    OSR told me that if I move in by 31/12/2015, then no land tax is payable.
    If I am not able to move in by 31/12/2015 due to tenant could not move out before 31/12/2015, then I need to send email to landtax@osr.nsw.gov.au to explain the situation and then finger-crossed.... (OSR will review and then decide)
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    And they will send you a letter that says the Commissioner has no discretion under the Act.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Amazingly it seems they do things they have no legal authority to do. I've seen it with a friend of mine who was caught defrauding them. He was rewarded rather than punished.

    Writing a letter will only cost 50c and worth a shot.