Hi All,
I’m in the market for my next IP purchase, but in doing so, I’ll be putting myself in the next land tax bracket. I know it’s a reality and a cruel fact of life, but I can’t quite accept what this will do to my bottom line. It’ll make the purchase almost meaningless (I’m sure the Government will be happy, though) and make any positive cash flow benefits non existent. It kind of makes me question whether I should be doing it at all (although property has always tempted me) knowing any future purchases will result in land tax eating away any potential profitability, an increase in lending against my name, and the all too realistic concern as to when the house of cards might potentially fall, knowing any future losses would have to come from my own pocket, not the tenant’s.
The more properties I buy, the more loans I acquire, the harder it becomes to pay off anything at all (with a subsequent increase in additional costs – i.e. land tax), which makes me question at what point do I start seeing any money flow in? Selling off assets triggers exit costs of its own (and *more* taxes), which I’d rather avoid.
Can someone please try and sell this one to me?
Cheers!
There are ways to structure things so you don’t pay land tax. Depending on the state:
spouse
company
trust
smsfyou can always buy in a different states too. NT has no land tax.
But of course land tax is only one thing to consider.
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
Would need more info on the company/trust scenarios. From what I’ve read it can be a complicated structure and limits lending ability.
I have an IP in a different state, but keen to keep it local, as I know the market better. I’m in SA.
Each trust is also eligible for it’s own land tax threshold in SA. There’s a few more docs to sign with a trust/corporate trustee setup but your finance doesn’t necessarily need to be impacted all that much – it’s quite common these days.
The right lenders just need to be used (and at the right time) – this is where an investment focused mortgage broker is worth their weight in gold.
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This reply was modified 8 years, 10 months ago by
Corey Batt.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Any further information I could potentially obtain from somewhere (or someone)? Seems there’s an abundance of it online, which can be a bit hard to narrow down and actually find what I’m specifically looking for.
What in particular do you want information on MsTrump?
If it is trusts and land tax in SA then first port of call should be to Revenue SA – the govt department responsible for administering land tax
e.g.
https://www.revenuesa.sa.gov.au/taxes-and-duties/land-tax/land-held-on-trustThen have a look at the law
Section 13 of the Land Tax Act 1936
http://www5.austlii.edu.au/au/legis/sa/consol_act/lta193690/s13.htmlTerryw | 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
Thanks, Terryw.
I’m looking for any information that would tell me how I could minimise land tax with my next purchase (i.e. how to structure the ownership of the next IP, and the next one, and so forth), what the future tax effects would be (e.g. how a property owned under a Trust would be different to that owned by an individual – future CGT, negative gearing, claiming losses, income rules, etc.).
Hi MsTrump
That’s a lot of information you are after that is specific to your own circumstances. Realistically you would need to discuss your circumstances with an appropriately-skilled accountant (and they would charge for this service). Key being “appropriately skilled” accountant. Someone that works day in day out with people investing in the property space with the types of structures you have mentioned.
If you would like a suggestion on such a person feel free to drop me a line and I’ll point you in the right direction.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks, Terryw.
I’m looking for any information that would tell me how I could minimise land tax with my next purchase (i.e. how to structure the ownership of the next IP, and the next one, and so forth), what the future tax effects would be (e.g. how a property owned under a Trust would be different to that owned by an individual – future CGT, negative gearing, claiming losses, income rules, etc.).
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In this case you need personal advice from someone qualified to advise on land tax – a registered tax agent or a solicitor. There are no books on the topic but there are some good articles around – technical stuff for lawyers and accountants mainly.
But all you have to do is to look at the land tax act cited above.
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This reply was modified 8 years, 10 months ago by Terryw.
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
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This reply was modified 8 years, 10 months ago by
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