How the land tax applies to Investment properties?
investment properties incur land tax if the value of the land exceeds a certain amount. This amount will depend on the type of owner and also the state the property is in.
Thanks, So what is the minimum can keep in each State without paying the tax?
or is there way to minimize the Land Tax?
I’m in Melbourne and looking for some advice in Victoria
Is anyone buying the IP’s in same state even they pay the Lad Tax? I have 4 IP’s in Vic and paying the Land Tax.
Now looking into 5th IP and looking only CG areas ( 10-15KM Range)
So what is the advice for invest in VIC or QLD?
Advice is not to look at land tax in isolation. No point buying somewhere with low growth only to avoid land tax.Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539
Victorian land tax rates are published here;
http://www.sro.vic.gov.au/sro/sronav.nsf/childdocs/-34FAD0EFBAFF8BE0CA2575A100442101-C580F3A333F4AD44CA2575D10080AD1C?openTkpurserParticipant@tkpurserJoin Date: 2014Post Count: 5
If the vic threshold for land tax bought by a trust is $25,000 then that is a huge amount of tax payable for ~4% over this value.
If the trustee is a company then are the company directors subjected to this tax? Is there any way around this tax if buying via a trust?
I don’t think directors are personally liable (in VIC), but the trustee company is. However it has a right of reimbursement out of the trust property, both under trust law and under land tax legislation. Don’t forget land tax is a first charge over the land – beats even mortgages.TkpurserParticipant@tkpurserJoin Date: 2014Post Count: 5
Just realised that it’s actually 0.375%. I read it as 3.75% so that’s a lot better than I initially thought!CharParticipant@charmaine97Join Date: 2015Post Count: 5
I own 10 investment properties across 3 trust structures (with assessed land value of $3.8m) in Victoria and pay about $25k p.a. in land tax. It would have cost me less if they were spread across 2 individuals and some trusts, because of the trust surcharge, but a hell of a lot more if they were just in one trust.
Essentially,$1 million in land value as an individual is the same land tax as $600k land value in a trust in Victoria.
If I had my time again, I would have done this:
$1 mil in my name,
$1 mil in partners name,
$1 mil in SMSF (land tax is the same rates as individuals),
Then start with adding $600k in each trust, but no more.
This would have only cost me circa $12k a year in land tax for $3.8m. My problem is I let my trusts get too high, when I should have started new ones – very short sighted, save $1,200 in set up cost and some hassle for each new trust, but then pay much much more each year on-going.
Also, never, never use joint names- it stuffs up your thresholds.
What I’m doing now is buying future investments in my own name or SMSF to stop my land tax from getting excessively high.Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539