Tax Tip 30: How to Minimise land tax in NSW

Damn. Is there any way to undo the ownership structure so they can split 2 of the properties into single ownership? (without having to pay stamp duty again)

I think it's a bit unfair that couples owning all properties under joint name have to pay a land tax penalty.

 

Not without dying or divorcing!

They can transfer but it will trigger CGT and stamp duty.

 

Don't know why they do it like this. A couple (2 people) own x property, they should have 2 x the land tax threshold. Not 1.

 

They are in the business of maximising tax!

 

hi - we are looking to buy a property in NSW that will settle in October 2017 - this will be our Primary Residence forever !. We cannot move till April 2018 as we are in a rental contract and that lease expires in April.

What is the best way to going about this situation - ideally we would like to rent it out for the 6months period and then move in April?

 

Seek specific legal advice but you could probably move in straight away while still renting your other place.

 

thanks Terry. That will mean that we will be paying rent at the rental property till April 2018. I was hoping that there be an exemption given the fact that we are buying it for PROR and the only reason we cannot move immediately is that we are in a rental contract?

 

Sounds like you will be renting the main residence out?

No exemptions like that.

 

yes that was the intent for 5-6months till we move.

 

Assume even if we dont rent it out we still have to pay land tax?

 

You need specific legal advice - or look at the legislation yourself.

 

It's that time of the year again! Last Tax. My dilemma is the escalating amount of land tax v’s rental income.

Property A consists of 2 titles (purchased pre 1985 CGT rules)
Property B build new dwelling in 1996 on one of these titles.
(Both Properties A & B owned by Spouse A)
Property C principle residence is owned by Spouse A & B
(No outstanding loans)

Below offer % for the accelerating rise land tax paid against gross rental income.
2010 12%
2015 23%
2018 24%
2019 30% est!
Who knows that 2020 will bring %40+?

Any suggestions on possible strategies and things to look our for on how to restructure ownerships to reduce land tax?

 

You could sell property A or B, or transfer B to A.
but the benefits of the full or partial CGT exemptions may outweigh any land tax payable.

 

For us thew figures are:
2010 10.5%
2018 50%
this is for 1 property. Rent and land value are pretty much average for the area, so 50% of gross rent going to NSW Land Tax is normal in the area where our property is.

I'm interested in suggestions and strategies to get the NSW Land Tax under control too!

 

Redevelop your site. It's grossly undercapitalised. If you get a higher rent, the pain will be a little more bearable.

 

Really the only way to save land tax on existing properties is to dispose of your interest in the property.

Another possibility is to challenge the valuation, but this may work against you if it increases.

 

Not possible: Zoning is R2 Low Density Residential. Knockdown/rebuild done 28 years ago. House is still like new. Can't build much bigger.

Wouldn't dare do that! 3 recent sales within 500m all were 1 - 1.5m over the current land value. All are now in the process of knockdown/rebuild. Am expecting a big jump in the next valuation as a result.

 

You don't challenge until you've consulted a valuer and have a fair idea of where the value lies.

A 28 year old house is about ¾ through it's design life, so possibly only 25% above land value. Have you room for a granny flat?

 

Good point: there is plent of room in rear for a granny flat, but access down the side would be an issue and we also have a 10x4 pool. So couldn't rent the granny flat separately.

 

Hi Terry, is it possible to have 3 thresholds for the 1 person? etc in your own name, company and a smsf?