Trusts and land tax in Melbourne

Discussion in 'Legal Issues' started by Think and Tinker, 4th Apr, 2021.

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  1. Think and Tinker

    Think and Tinker Member

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    Hi all,

    Wondering, if I purchased a rental property in Melbourne under trust 1 then purchased a second property in Melbourne under trust 2, would the land tax authority assess the land for the two properties together or separately? As the different trusts would have different corporate trustees I assume it would be separate meaning overall less land tax to pay for the beneficiaries by having the properties in separate trusts?

    Thanks to anyone that's able to offer some insight.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Do you mean you will be acting as trustee for 2 different trusts?
    Generally the trustee will be assessed separately if the beneficiaries of the trust are not the same.

    if there are different trustees of different trusts they are generally not grouped like they might be for companies.

    Seek specific legal advice though.
     
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Of course in Victoria the merits of having two trusts is of little benefit as the theshold is so low for a trust ($25K) and the progressive scales that are used in Victoria. The $1K saving for 2 x $400K of land value would likely be exceeded by the annual costs for accounting, tax and ASIC fees etc. Its usually not really a sound "strategy".

    There is one situation where it may be very wise to have two trusts each owning one property. A unit trust. Unit trusts should not generally own two or more properties as very unusual CGT implications can occur.
     
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  4. Simpsons

    Simpsons Well-Known Member

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    Unususal CGT implications in which way?