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Rural holding tax wise

Discussion in 'Accounting & Tax' started by dabbler, 19th Sep, 2016.

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  1. dabbler

    dabbler Well-Known Member

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    Hi All,

    If a block with house is RU1 rather than large lot residential, although, at 13acre odd is well and truly not a farming lot.

    If this is purely a home, can you expect it to be CGT exempt if not running a farm or business.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    A limited amount of curtilage is exempt.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    No, because the main residence exemption is limited to the home and surrounding (or nearby) 2 hectares.
     
  4. dabbler

    dabbler Well-Known Member

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    Ok.

    so if 4ha, would you get only half of the block effected, or is it more complex.

    also sounds like keeping a place that exists in Syd as main residence would be wise.

    is there any benefit to buying in a trust

    what about pestering council to allow it to be subdivided to 2ha, so the block with house can be main residence and other lot possibly sold.
     
  5. dabbler

    dabbler Well-Known Member

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    I could not see the amount in the exemptions, I do recall there was a size.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You can choose the 2hectares of the property with the highest value. The swamp out the back my have lower value to the front paddock. You would need a valuer to apportion it.

    Yes there are benefits to buying in a trust.
     
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  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The 2Ha rule is a bit strange...good strange.
    1. You can choose which 2 HA is the exempt bit. (roadways, dams and forest, rocks etc arent a good choice !)
    2. The 2HA rule isnt 2HA !!! Its more. Its the house PLUS 2HA of adjacent land

    The valuer can then provide a report that apportions the total land between the house +2Ha and the total. ATO example is provided below.

    Dwellings, adjacent land and associated structures | Australian Taxation Office

    A trust cant claim a main residence exemption however.
     
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  9. dabbler

    dabbler Well-Known Member

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    All good info, clearly on that size block the CGT is nothing to worry about, the house area and improved parts around the house will make up the bulk of value :)

    Onto other aspects, I will have to read later what the different trusts can do.

    Shifting to state tax, land tax would be no laughing matter, it is valued quite high, as it would be no cattle station, we could run a few sheep and grow some select crop/s or fruit etc as a business, as will also have PAYG income could we run a business on the 2 or 3HA that is not for private use and kill 2 birds with one stone. Maybe as a sole trader ?
     
  10. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Land tax has some strict rules and you must apply for an exemption and its not automtic. Hobby farms struggle to get it. The land must be dominantly used to generate revenue and running a business on site would hinder and not help. My mate started with 50 cattle and had to jump through hoops to show his plan over two years was to grow herd to 200 which suits the land size and paddocks. They agreed as he was redoing all fences and tanks as part of that plan. The former owner had a bizarre plan that included a tea house - They were denied the exemption for that reason and why OSR were sceptical. They came onsite to check.

    Primary Production Land Exemptions | Office of State Revenue
     
  11. dabbler

    dabbler Well-Known Member

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    It is zone RU1, however it is no cattle station :)

    I have been looking for another business to carry on, and 8-10 acres would be enough for some specialist crops.

    I will enquire with them.

    However, if that does not work out, then the land tax may not be on the whole block, I will have to call them and see what they say if there is any allowance. I noticed some blocks get an allowance for some reason. I think they are way over valuing the land too for RU1 zoning