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NSW Land Tax, daylight robbery

Discussion in 'Accounting & Tax' started by Eric Wu, 3rd Feb, 2016.

  1. Eric Wu

    Eric Wu Mortgage Broker Business Member

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    Just received Land Tax Bill today, shocking !!!

    2 IPs in Western Sydney :

    IP1: Taxable Value: $234,000 (2014), $264,000 (2015), $383,000 (2016)

    IP2: Taxable Value: $210,000 (2014), $234,000 (2015), $344,000 (2016)

    the above is about 45% increase from 2015 to 2016, ridiculous

    has anybody tried to object the assessment, any luck?

    cheers
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You just had about 60% growth in 2 years. Isn't it terrible!
     
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  3. pinkboy

    pinkboy Well-Known Member Premium Member

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    ....and may I ask what capital appreciation you have enjoyed on those properties in that time?

    ....and that might put some perspective into your 'rant'.......

    pinkboy
     
  4. Eric Wu

    Eric Wu Mortgage Broker Business Member

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    on the serious side, how could the OSR jack up the land value so much?
     
  5. Biz

    Biz Well-Known Member

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    Did someone not tell you there was a boom last year?
     
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  6. thegreat

    thegreat Well-Known Member

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    In above example, you may not owe any land tax if you spread your property ownership to your spouse? One for you and the other on your spouse's
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    Blame all of the investors, it's all their fault (apparently).

    Let's line them up, esp those in western Sydney: (I won't name & shame).

    By my rough calculation, you will owe the grand sum of $1289.33 (on a LV of $566,333) - cry me a river.
     
  8. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    You want your properties to be valued less?!?!?!
    OSR valuations are generally very conservative and is only on the land of course. In the past 1-2yrs the value of that land has increased in the real world considerably and the OSR is reflecting that.
    In that time you will have enjoyed access to increased equity, higher rental returns and the OSR is reflecting that.
     
  9. RetireRich101

    RetireRich101 Well-Known Member

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    To ease your pain, they have also increase the threshold to 482K from 432K, ie 11.5% increase.
     
  10. Kangaroo

    Kangaroo Well-Known Member

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    Land tax was designed to stop people from holding lands.

    The real issue will come when the land component value is very high( say, doubling in every 10 years) and normally rents can not keep up with the tax increase( say, growining 3% pa or CPI and after 10 years, you got 34% increase).

    Eventually the land tax will surpass the rents in theory when investor is ready to retire.

    The strategy of buying houses only and holding long term will eventually make you broke.

    Therefore, buying across states, setting up multiple SMSFs or other state specific trusts to invest seems to be the only way to go.
    It also seems that we should buy houses and units in a mix to reduce the land tax when we approach retirement.

    The land tax threshold increases is also too small to accomodate the land value increase. I belive the whole land tax scheme is designed so that each family has only 1 house as investment apart from their own PPOR.
     
    Last edited: 4th Feb, 2016
  11. Scott No Mates

    Scott No Mates Well-Known Member

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    Where in Sydney's inner ring can you buy a house on a 50' x 150' block which has a LV less than double of the threshold?
     
  12. Kangaroo

    Kangaroo Well-Known Member

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    middle or outer then.
     
  13. Random Username

    Random Username Well-Known Member

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    True dinks?

    And you back this up with?
     
  14. Chilliblue

    Chilliblue Well-Known Member

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    And it is a tax deduction
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    Who'd want to love out there? ;)
     
  16. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    I always surprised when investors seeking long term property growth who use equity release loan based on increased property values then complain about land tax increases.
     
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  17. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    No. Land tax is a state revenue measure intended to collect tax from property owners who enjoy increased values. The strategy of buying properties of any type in a single state using the same human owners is where investors can get it wrong. Those who spread their portfolio across many states or even regions may avoid land tax altogether. Multiple SMSF would be a strategy very difficult to implement for very few taxpayers.

    The threshold of $482K applies to the unimproved value of land and is 11.57% higher than last year ($432K). That 11.57% increase actual saves each taxpayer $800 with this form of indexation. An investor owning Sydney property is far more prone to land tax than a regional investor. I have some with many regional Ips who pay little if any land tax. The reality is land tax is a wealth tax. It is also reason why Sydney rent pressures upward will increase as owners seek to pass on their actual costs. For Commercial leases this may well be automatic

    Update : As I wrote this I received a client notice. Her Sydney properties rose in value for tax purposes from $1.24m to $1.35m under the smoothing formula. Her land tax bill FELL by $400 due to the increased threshold. However the next two year will incur the effects of the increased 2016 land value which rose from $1.18m to $1.53m in three years (almost 30%). The PPOR rose by 56% within that.
     
    Last edited: 4th Feb, 2016
  18. Biz

    Biz Well-Known Member

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    Not really, even if you don't "enjoy" an increase you still get slugged regardless. Tax me when I make money not just for the sake of holding.
     
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  19. Kangaroo

    Kangaroo Well-Known Member

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    One person I know owns an investment house with land value 1.7ml. Rent is 1000 pw. rental pa is 50k. land tax is 1700K*1.6%=27.2k. Council rate+repair+whaever else is minimum 4K pa. She has at most 20K left . She bought it about 25 years ago for 600k. Rent was 900 pw 5 years ago. Current sales price for her property can be over 2.5ml. For her, property boom is a bad thing. She needs rent boom instead.
     
  20. Scott No Mates

    Scott No Mates Well-Known Member

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    @Kangaroo - land tax would be $19,588 - someone is p!$$ing in your pocket.

    She's complaining about what? CG of $1.9m on a pre-cgt asset?

    How much has she spent over the last 25 years improving the property? (&people wonder why they can't achieve a decent return)