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When do land tax thresholds increase?

Discussion in 'Accounting & Tax' started by Tim86, 8th Jul, 2015.

  1. Tim86

    Tim86 Well-Known Member

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    Do the land tax thresholds get indexed to inflation?

    I'm about $200 000 under the land tax threshold in QLD after splitting everything with my wife and not including our PPOR.

    I'm wondering, with inflation at say 3% per year, does land tax threshold also get indexed and increase in turn? Or does it increase at all?

    Or is it kind of like income tax where you get bracket creep and eventually just through wages rising with inflation you get stung.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    QLD doesn't seem to move the threshold. In NSW it changes every year with the CPI.
     
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  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The NSW budget last month didn't adjust the threshold or rate of land tax which is referred to as bracket creep. They can do this independently of the CPI indexing.

    NSW uses a smoothed three year averaging to cushion this (intended !!) effect. However many media commentators did refer to the extra billions the Govt is reaping through rapidly rising prices... More and more taxpayers are being caught by land tax (and extra stamp duty revenue). The base threshold hasn't been changed for a long time and some were hoping that this and the firsthome concessions might get a revamp to a realistic level. They didn't.

    http://www.propertyobserver.com.au/...eases-to-outdo-stamp-duty-revenue-growth.html
     
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  4. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Either
    A. Never
    B. When there is spare money in the budget and too many people are complaining about land tax

    Politicians in QLD seem to favour A, although vary rarely B. The current party is of the opinion that land tax only favours the rich property investors exploiting the poor and stopping first home buyers getting a foot in the door so why would they change it. More likely to drop it or change it to try and plug the large hole.
     
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  5. wylie

    wylie Moderator Staff Member

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    I'll second the "never" answer :rolleyes:.
     
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  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Nobody drops land taxes like land tax and duty when a market is rising. They only address it when the market is struggling and the builders demand incentives to help them out. At present its windfall income...If any state would consider a change soon it may be WA as its falling off its highs and the downturn in energy / mining / resources may have a impact.
     
  7. Tim86

    Tim86 Well-Known Member

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    Bugger...

    Not great news.

    I worked out if I purchased another property in Qld for say $500 000. The land would probably be worth $370 000. Me and my wife are currently $200 000 off of the land tax threshold, so that would make us $170 000 over. So that would mean the initial $500 tax plus the 1cent in the dollar for each of us right?

    So I would be at $685 000 land value
    My wife would be at $685 000 land value

    Me = $1350 land tax
    Wife = $1350 land tax
    Total = $2700 land tax

    That doesn't sound too... bad.

    But then on average I can see each one of my properties going up $15 000 in land value. So each year that's $75 000 extra split between us.

    So that's an extra $375 each per year added to our land tax... will certainly add up as the land value grows over the years.


    My old man was lucky with land tax. He did a subdivision, initial land value $300 000, and then council just said land value of each block after the subdivision was $150 000 each (split the initial value). So waaay under valued. But they are limited with how much they can up the value each year. They put the value up as much as they can each year, but it's been years now and they are still low $200 000's for each block when the actual land value is $350 000 each.
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    $370k out of $500k seems high for QLD. Check the rate notice in the contract for the unimproved land value.
    Disc Trust would get its own threshold..Lower than individuals but additional to yours. Problem with DT is neg gearing losses are quarantined.

    The LT is tax deductible....And will slowly increase with time.