Qld land tax

My annual land tax is really an annoyance. Given the number of properties I have the annual amount comes as a real hit.

Any practical ideas on how to reduce?

I'm thinking maybe buy a little just across the Gold Coast boarder in NSW as the Qld amount seems to get bigger the more hold beyond an initial amount.

Any other ideas anyone?

Over time It really acts as a disincentive to hold as you need to be outperforming inflation in terms of capital appreciation by at least the amount that is taxed each year. So for now I'll hold as I'm expecting really strong growth Gold Coast next 5 years. But still I hate this tax as its so destructive to value.

 

I feel for you and all those who have multiple holdings in the one state and one entity (be it personal holding or structured in trust or Co, etc).

Aside from being the cost of doing business and that we should structure ourselves by way of entity (beware states with no entity threshold), divesting interstate has been the best thing I have done.

Further to this, getting into assets where the tenant pays this impost or at least helps fund it on a single holding basis.....thinking commercial (not retail) such as offices or industrial, might also be a strategy to entertain.

A few years ago I harvested one particular resi IP in Melbourne that had a land tax bill that was over 25 % of the rent (very land rich old crappy house). Our SMSF has three holdings in Vic and also pays a not insignificant amount. I still have personal holdings there also so can hardly contain myself to receive the invoices come March

Why are we charged land tax? Because the state revenue offices can. It adds to their pool of funds to mismanage on the state's behalf. In and of itself, it offers nothing but a money grab. If it were allocated on a single holding basis it would be more palatable. However, the more the merrier. The more proactive the greedy investor is to fend for themselves and their retirement and provide rental accommodation to tenants, the more exponential the punishment administered shall be. Bracket creep and jumping two tiers all in one year can be very overwhelming.


Historically, it was a land tax to prevent land barons hoarding developable tracts of land in and around expanding metropolitan areas. Then it was kept and it was used to supposedly fund all sorts of war and post war repatriation efforts and so on the justifications go. Now it exists because like any paradigm , everyone is conditioned to pay it and so the state levies it to the investor or business owner who also owns freehold and the coffers are wide open and receptive to the cash grab.

Spread the love around. A little bit here, a little bit there with interstate purchases and also some variety in entity holdings may help hedge the exponential pain of this impost. Like all things we cannot change............. Learn the rules and play by the rules to minimise these sorts of outgoings and levies. Benefit of interstate aside from land tax divesting is the exposure to different markets in different cycles. If I had my time again and know what I know now, I would have started the interstate strategy a lot sooner.

@big max your strategy of crossing the border may be sound from a land tax perspective, however make sure the investment decisions are being made for the right reasons, not merely to avoid/reduce land tax. I don't follow the Tweed market at all so can't chime in on that score. I don't necessarily believe that it will have the same upside as well located (used) houses on decent dirt on the Gold Coast though. Then again, I could be wrong.

 

I am with you. I have Qld IPs in our own name and in trusts but still have to pay a small fortune in Land Tax.

Land Tax and Stamp Duty give me the $hits. Do get me started with S/D!!!!

 

You all realise that 95% of the population thinks that those who pay land tax are just rich ba$tard$ who deserve to pay their way plus some (for the poor people who you have contributed to pricing out of the market with your property investing activities), right? You'll get no sympathy from them by complaining. How dare you have the gall to whinge about having to pay tax when they can't afford to scrape a deposit together (especially so when beer, cigs and pay TV) go up every year!

You want to avoid land tax then sell your land holdings and line up for the old age pension like the rest.....

 

Alternatively, since you have taken responsibility to provide for your family and yourself - get others to pay your land tax ie Commercial.

Setup structures (trusts etc). Use a spouse to own RE. Diversity into other states to take advantage of any tax free thresholds, as @Player says.

Now anyone have suggestions on how I avoid luxury car tax on the next replacement for my Mercedes?

 

Thanks guys.

Some good advice above. I'm really inclined to take some gains eventually and put into long term holding high yield ETFs as I move more into more pure and safe retirement mode a capital preservation. But the annoying thing is in the meantime that my outlook for Gold Coast is so strong I can't justify selling!

PS I did a search here and it seems there are numerous threads on the topic which I will read.

Am I correct that for a resident I don't pay land tax on my ppor? If so one idea is to accumulate more value in a ppor. Also if I had kids could I put one property in each family members name and they would then be expect as each could claim it's their ppor?

 

Thanks. Ps presumably whether commercial or residential you could pass the land tax on the lessor right? So is there really and distinction between commercial and residential in this regard?

 

Thought of investing over the ditch?

 

I think Tweed Heads is well worth considering. Not just for the land tax spread but because I think it will be a natural beneficiary of the Gold Coast growth ahead and also proximity to the Gold Coast airport. And I would expect eventually there will be a light rail "connect" which will create lots of hype due to it being "interstate".

 

The lessor is the owner and in residential the burden lies with the owner.

As for commercial in many instances the owner srill bears the cost or oart of the cost as leases usually contain a provision that the tenant pays on a single holding basis not across all of their property holdings.

 

Only if they are living in it! If rented out over 6 months a year then still subject to land tax as far as I know. There is a thread on this somewhere.

 

Nah, we are not in accumulation phase any more.

But then, one never knows!!!

 

Only if you're not living there on the census date eg NSW is midnight 31 December. But you could rent it out from 1 Jan to 30 December without any problem.

 

Noted. But presumably you could also pass the burden on to residential tenants also right? Or just factor into the rental price?

I think the main point is that commercial leases typically provide a higher yield than residential.

 

For existing properties you could restructure the ownership.

For future property purchase in QLD you can look at trust set ups - land tax is really optional in QLD.

 

Of course you can. If your NSW land tax is $5.2k (about $870k), that would equate to $100/wk extra assuming this is the only property subject to land tax.

Where are you going to find a tenant prepared to pay $100/wk more?

 

Noted. So as I said above its really about yield. And yield on commercial is better.

 

@big max - it can be but it's more caveat emptor. More vendors are seeking to sell at residential yields which are wildy out of kilter with value.

 

I assume you mean by this one property per trust. Please confirm.

But, if you do this, some/all the money you saved on Land Tax is spend on admin/accounting fees, isn't it?

But you can still get caught in the Land Tax net. We used a new trust with a new corporate trustee to buy a block of four units. We thought we would be safe. Nope.

I know - we should have used four new separate trusts with four new different corporate trustees ...

 

Presuming these are strata. Isn't it pathetic we need to go to the extreme of over-kill to consider to have four different entities (with their own quadrupled running costs) to hold each door. Even if land tax is avoided at outset or at least minimised it can quite quickly escalate as proportional land component rises in value.

I could rant about this topic for ages. Best I stop now.............