Hi everyone
I have searched high and wide amongst the thousands of posts on propertyinvesting.com but have not yet seen a straight answer to this question:
“Does land tax have to be paid on a wrapped property in NSW if the wrapee qualifies for exemption from land tax because it is below the land tax value threshold and it is their primary place of residence?”Cheers and thanks
PyramidCheers
PyramidHi Pyramid
Instalment Contracts (wraps) in NSW are great because they have the wonderful general effect of making land tax disappear! Here’s why:
1. In NSW a property is deemed to have changed ownership, for land tax and stamp duty purposes, on exchange of contracts.
2. Once you have sold the property via an Instalment Contract (wrap), you have exchanged contracts, ie. disposed of the property and are therefore no longer liable for Land Tax.
3. For land tax and stamp duty purposes, your wrapees now own the property but it is their principal place of residence (presumably) so they are not liable for land tax either.Land tax has now disappeared for both you and your purchasers (wrapees). Check all this with a good “wrap savvy” lawyer but we have had a zero land tax assesment for a couple of years now and we have carried out a number of wraps.
I hope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul
You have finally hit the nail on the head. This is exactly what I needed to know. I will of course check with a wrap saavy lawyer – but I ca now go in better informed.Really appreciate the straight answer
Cheers
PyramidHi,
Section 26 of the Land Tax act for NSW is the part you need to read. It covers it all there.
In essence, the wrappee;
– must have possession of the property
– have purchased with a valid contract
– have the rights as if they were the owner (ie can rent property out etc)Regards
Michael G
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