Qld land tax

It depends on the value of the land, but you have to allow for some future increase. You might need 3 trusts per property.

Generally the annual running costs for the trust will be much less than would have been payable in land tax.

e.g. a $700,000 property
Owned in one trust it would be around $7,400 per year in land tax
Owned by 2 separate trusts no land tax.
owned by an indivudal how is already over the threshold it would be around $1,500 per year in land tax.

 

Yep, they are strata titled. When we bought the property in 2008, we were below the trust threshold.

A couple of years ago, we exceeded the threshold and the trust has being paying Land Tax ever since.

We are seriously thinking of setting up yet another trust with a new corporate trustee and then selling two of the units to the new trust. Just need to do some what-ifs to determine if/when this would be the wise thing to do.

 

@kierank - consider the costs:

• Stamp duty
• CGT
• Additional trust costs

How soon will you recover these outlays?

 

Also consider the laws may change. They could introduce a grouping provision and remove the separate threshold per trust. I have heard nothing indicating this could happen, but it would be dreadful to trigger CGT and stamp duty and then happen.

 

True. But I think on general due to wider demand for residential property as an "investment" (and indeed also just for living) yields will likely always be lower for residential (unless if/when there is a serious bust - which is when I buy!).

 

Yeah, I have to consider these costs against 70+ years of Land Tax. I have a gut feel who the winner is.

It is not the first time we have had to buy properties from ourselves. Years ago, we own a property in our SMSF. The property experienced really good capital growth, a lot more than we were forecasting. This was back in the days where SMSFs couldn't borrow money. We really wanted to tap into this equity. So, we crunched the numbers and they showed us that we should 'sell' this property into a new trust.. This is exactly what we did. Of course later they changed the rules to allow SMSFs to borrow funds. Hmm!!!

Even that trust is now paying Land Tax but, at least we used that equity to continue our investing journey.

Sometimes, I get the impression governments don't want you to get ahead.

 

As I keep saying:

Learn the rules, play the game.
If they change the rules, change your game.​

 

I believe you pay no Land Tax on PPOR. Then you can own up to 600k of Land Value outside your PPOR in your personal name (in QLD). So can your wife (in her personal name). This will get you to 1.2 mill Land Value in IP's. (Un?) Fortunately as land value rises you can own less and less in your own name/s. After that it's Trust and interstate time.

You could move into your most expensive property land wise (exempt) and spread the rest around as a start? Sell to spouse etc. Need the words of @Terry_w on this though. I'm just a hack.

How do you figure Land Tax on units though is what I want to know?

 

I believe they take the UCV for the site and apportion it based on Lot entitlements. From that, they work out whether you should pay Land Tax or not.

 

In QLD the main residence of a person can be exempt from land tax provide certain requirements are met:
s 36 LTA
Land Tax Act 2010 - SECT 36 36 Land used as the home of a person

 

Number of children you have should be a consideration in your trust structuring also.

If you have 3 kids then 3 trusts owning a property can be an easy way to leave property. Each kid becomes appointor of one trust upon your death. If they then have fight over selling vs not selling and can't break the deadlock, the statutory trustee sale route is much cheaper then having to litigate over control of a trust.

 

How come ? Just by restructuring ownership ?

I don't know if more than one trust can purchase a property - if so, I would have thought the gov would have the smarts to know anyone can keep purchasing in n number of trusts ?

Have you written any tips on how noob investors (Single/couple)can structure their purchases in QLD/Other states ?

 

In qld separate trusts can each get a separate threshold

 

Some random calculations. Say I was going to buy a property in QLD that had land value of $500k. A quick comparison (with my guesses for costs):

• Holding in personal name (assuming no other land in QLD) - accounting fees $200
• Holding in trust - setup costs $1600, fees (annual acct/asic) $1,000
• Holding in two trusts (tennants in common?)- setup costs $3,200, fees (annual accounting/asic fees) $2,000

Now...

• Personal name, land value $500k, land tax $0,
• One trust, land value $500k, land tax $4000,
• Two trusts (tenants in common), land value $500k, land tax $0

In X years time when land value rises to $600k

• Personal name, land value $600k, land tax $500
• One trust, land value $600k, land tax $5,700
• Two trusts (tenants in common), land value $600k, land tax $0

In X years time when land value rises to $699k

• Personal name, land value $699k, land tax $1,500
• One trust, land value $699k, land tax $7,400
• Two trusts (tenants in common), land value $699k, land tax $0

In X years time when land value rises to $1000k

• Personal name, land value $1m, land tax $4,500
• One trust, land value $1m, land tax $12,500
• Two trusts (tenants in common), land value $1m, land tax $8,000

Of course this is assuming you are only holding this property in your name. If you bought 2 identical $500k land value properties ...

Now...

• Personal name, land value $1,000k, land tax $4,500
• Each in One trust, land value 2x$500k, land tax $8000,
• Each in Two trusts (tenants in common), land value 2x$500k, land tax $0

In X years time when land value rises to $600k

• Personal name, land value $1200k, land tax $7,800
• One trust, land value 2x$600k, land tax $11,400
• Two trusts (tenants in common), land value 2x$600k, land tax $0

In X years time when land value rises to $699k

• Personal name, land value $1399k, land tax $11,100
• One trust, land value 2x$699k, land tax $14,800
• Two trusts (tenants in common), land value 2x$699k, land tax $0

In X years time when land value rises to $1000k

• Personal name, land value $2m, land tax $21,000
• One trust, land value 2x$1m, land tax $25,000
• Two trusts (tenants in common), land value 2x$1m, land tax $16,000

Then there are a lot of other issues to come into it...

Regards,

Jason

 

And in QLD if you make changes to a disc trust to avoid such a concern (eg vary appointors etc) this is also a stamp duty trigger. QLDs unique duty rules could easily be changed so they are more uniform with other states. I believe it is a higher risk strategy but havent seen or suspect its on the radar at present. The QLD duties act was rewritten in 2010 so its fairly new law.