NSW Land Tax on investment property

Hello all,

I am new here and hope to seek some advises on land tax. I have 2 IPs. Both are in join name. IP1 ownership 90% -10% and IP2 ownership 50%-50%.

1. I believe we are entitle to only 1 threshold regarless of % of ownership. Correct me if i am wrong?
2. I have not recieved the assement for serveral years. Should i contact the state or because it is under threhold that is why i dont receive the assement? Assume they missed bill the land tax. Do we penalise if i contact them?
3. Can i restructure the ownership now, tansfer 10% to 90% so i own 100% on IP1, or is it too late? Assume it is ok to do it now, will i still pay for existing land tax (assuming they missed bill)?
4. Some posts here mentioned we can only amend last 2 years tax return to include land tax, can we lodge objection beyond the previous 2 years to include land tax deduction ( Again assuming there is one)

Much appreciate your advise on this

 

How much is the land value for each property?

 

Appx around 1.3M (700k + 600k)

 

Is that off your rates notice/Valuer General website or market value?

 

They used send me the rate notice one a 3-4 years back and never receive it since then. So it was the value at the time.

 

You may need to re-register for landtax otherwise you will end up with a big surprise tax bill.

 

1. Yes. Joint owners in any % are all treated as a single assessment. The % each owner holds also counts for secondary assessment in NSW. eg Lets assume 2 IPs and both are 90/10%. Then both are worth $600K land.
2. Are you registered ? If you are you can login and check. You need a client ID and a correspondence ID. You can call and they can assist that if you cant find one. If the land isnt recorded or you arent registered land tax liability for arrears is a real possibility.
3. CGT and duty apply to changes. The effect of secondary assessmnets needs to be considered. A joint assessment does not mean you get two thresholds.
4. Some taxpayers can amend up to 4 years. This is based on the assessment date.

 

How different is the value on rates notice compared to Valuer General website?
I'm looking to buy investment properties, is there a way I can find out the land value?
Thanks in advance.

 

Timing usually - Generally much the same or identical.
The sale contract should have a rates notice or property title details. You can also search by title or address at VG website: Home - Valuer General of New South Wales

Unimproved land value and property market value are different matters.

 

It is very interesting and really helpful. Thanks for sharing. To point number 3 - if he has not received old assessments and assumes he is liable for the previous year land tax. What will happen when he transfers the 10% ownership? Would it trigger the land tax? Will this consider as tax avoidance?

 

Transfer of ownership does trigger a land tax clearance process when detection may occur. Being realisable unregistered is not tax avoidance but can still result in some penalty

 

1.No
2. Land tax is a liability that can be assessed in arrears with penalties and interest. The taxpayer is obliged to register in nsw.
3. Transfers trigger review. Its called land tax clearance
4.Sometimes it is 4 years but there is a proposed law change to strip this

 

Land results in a statutory charge on the land so new owner would cop it if not paid at settlement. Consider the deductibility also

 

OSR rarely use that provision, but can. There is a clause in the Act (maybe the tax admin act ?? ) that renders a former owner liable for unpaid duty and land tax and the Commr can even impose a charge over other property owned by same party. A solid avoidance rule. Had a client who acquired land (SMSF) and didnt pay duty for some reason. Years later it was sold. Also no land tax clearance. Two years after sale OSR assessed the unpaid duty and one year unpaid land tax. I imagine both alternative rules allow the Commissioner to use either approach eg If a former owned was deceased etc. Legal adviser said he had seen another example and OSR audit regularly look for titles where certain events like duty etc are missing. Then its reviewed. The time period was extensive - UP to 5 years I think. Longer for evasion.

Taxing laws are usually robust to get their $$$ and penalties / interest.

 

Sound to me like there is no way out. if you pay the current liable, would that be ok to restructure the ownership later?

 

There is no way to avoid existing liabilities