I have just completed reading the book and found it certainly had me challenging our current strategy which is aquiring properties for capital growth.
Nowhere in the book did I see a mention of what entity the 130 properties were held in, ie Tenants in Common, Pty Ltd, Unit Trust etc.
The reason for my interest is that with a mere six investment properties all owned in the same names (wife and I as joint tenants) we already are burdened with an annual land tax bill of over $6000. Here in WA, if one was to have 130 properties with an average value of say $100,000 all in the same name, the annual land tax bill would be $296,425. That would certainly put a dent in the old cashflow.
Interested in how others are overcoming this obstacle?Regards
I beleive that Steve uses various Trusts with corporate trustees to hold his property.
I guess there is no real way to avoid land tax, it si just another expense.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi,
I guess there is only so much information that can fit in one book!
Yes – I use accounting structures that limit my liability. My structure is outlined in the WealthGuardian product (see: http://www.PropertyInvesting.com/resources)
However, for land tax purposes, this is largely irrelevant as common entities are grouped (except where you invest interstate).
Also, remember that land tax is on the land value only – not the total value of land + building.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Can anyone advise when land tax applies in Qld and what the rates are or alternatively where I can go to find out? We have 6 rental properties but only two are houses with the remainder units.
Many thanksHi Terryw
I wasn’t looking to avoid land tax, merely avoid the exponential increase in tax payable which occurs as one accumulates properties in the same name. As it stands a cashflow positive portfolio can rapidly become a cashflow negative portfolio.
I have read of people owning rental properties through unit trusts and hybrid trusts, also as tenants in common with say one person owning 99% and the other 1%, then on the second property changing to 98% and 2% and so on.
It is an issue which I am sure many are faced with so I am interested as to how they deal with it.Regards
Clive
Shirley,
Qld Land Tax (as of 2002)
Land Value Tax
100K $865
300K $3095
500K $5750
1M $14465
2M $36KATO website should have up do date figures
J
“Success comes from having the proper aim as well as the right ammunition”
Geez, I thought that you were exaggerating about the land tax rates. Anyway, I looked at the QLD revenue site and you’re correct for this year too.
Anyway, it makes me wonder why anyone would want to invest in QLD then. I mean for a place with a land value of $300,000 to cost you $3,095 per year in land tax, is a huge amount to have to bear. Must dampen your profit margin significantly.
Hi Luckyone, $300K in land value would mean that you have LOTS of houses, or that the houses you have are reaaaaaally expensive. I don’t think the ACT is any better – at least in other states you get some exemption up to a certain value. Not here. Plus my land values seem to be rising exponentially each year, therefore an increase in tax also.[xx(]
Cheers
MelHi All
We have 6 properties in Qld 2 houses, 2 units and 2 t/houses and we just paid $3300. For Mel’s interest the land value on our units is the highest, not our houses. You get $220,000 threshold in land value before they start taxing you. I am unsure how this is against other states but it now must come into our holding cost equation when we look at buying.The land tax rates quoted by J are what is paid after the threshold is reached.
I would be interested to know what the rates and thresholds are in other states.Erika
There is an advantage in QLd. As mentioned by steve for land tax purposes entities are grouped together but in Qld trusts are treated seperately and trusts get the threshold.
What this means is you get a $200k+ threshold for each entity and thus avoid land tax in Qld.
Cheers
Erika – I’m nervous now. When were you notified that you were up for your land tax bill? Is it a part of your tax return?
We’ve purchased our properties this year (all since March) and haven’t been notified as yet. Our accountant did ask if we’d been charged land tax but as yet, we haven’t. I would have expected houses to add to the land tax more than units. Why the other way around? Is the figure taken from the Council rates valuation?
Thanks
ShirleyHi Shirley
The office of State revenue send you the land tax bill it is assessed on the land value you hold at the 30th june each year. The dept of natural resources and mines values your land and sends this to you, it is the average over the last three years valuations that they tax you on. Our land under our units is worth more because it is in a prime location sitting right on the Brisbane river, where as our houses and T/H are in the burbs. Also our units are only a low rise type and have quite substantial gardens giving the whole complex quite alot of land.
ErikaMaybe I should have said ‘property’ rather than houses.
Erika, where your units are on the expensive land, I bet they also are not cheap – which was my point re having a high land value, not that it HAS to be a house to be expensive.
Cheers
MelHi All
Mel i was just making the point that because it is a unit doesnt mean it cant have considerable land value. When we bought 3 yrs ago they were cheap and thanks to considerable CG one of the units is the most expensive property we have. We bought because of the location and the fact that they were very good value at the time.MAny people write that they would only buy houses because of their superior land value it pays to look at all places. We probably wouldnt buy them now as the rental yeild is not high enough but that is a problem in most capital cities.
ErikaHi All,
Other States tax are as follows (as of 2002). I will use the land value increments as per my first post.
VIC
Nil
400
800
3525
11600WA
15
870
2383
8783
27783SA
175
875
4175
12425
49425TAS
500
4113
8613
21113
46113ACT
1000
3750
6750
14250
29250note there is none payable in the NT. These figures are from Peter Waxmans “Investing in Residential Property”
Cheers
J
“Success comes from having the proper aim as well as the right ammunition”
Thanks for everybody’s contribution on this topic. Philip and I weren’t even aware that there was such a thing as land tax until recently. I think it is something new investors should know about as it could have a big impact on profitability once several properties are accumulated.
Shirley
I think it is something new investors should know about as it could have a big impact on profitability once several properties are accumulated.
Shirley
Hi ShirleyA very big impact indeed and the reason for my original post. While having the value of one’s properties grow by 100% or more in a short space of time might give one a warm glow, it does nothing to fund the disproportionately higher land tax bill.
Regards
Clive
Folks
Sorry for the dumb question that I could find the answer too elsewhere, but since we have a thread going … Is land tax payable or calculated on a PPOR + IPs or just on IPs?
Cheers
LeighK[
]Carve your own path and lead the way …
Hi Leigh
I am not completely sure but I beleive in NSW that if you have land value over a large amount say 1M that you have to pay land tax on your PPOR.You see these people sometimes on TV who have lived in their houses for 50yrs and it used to be in the back of nowhere and now it is the latest hot spot and they have to sell because they cant afford the land tax.
ErikaHi Leigh
… Is land tax payable or calculated on a PPOR + IPs or just on IPs? NO
NSW
Landtax threadhold for PPOR: $1,680K
Landtax threadhold for IPs : $261KThere are different rules for each state so better to check it out.
Regards
Huey
]
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