"LAND TAX" The Property Owners Cancer

[glenC]

Further to recent discussions on Land Tax, I have come across a very interesting Web Site that should be visited if you are a property owner.

It is the web site of David Landa Stewart Lawyers who have successfully won two very large appeals in the Land and Environment Court, resulting in substantial reductions in Land Tax. They also suggest that due to substantial overvaluations over a number of years, that objections to previous years Land Tax levels should be lodged.

The site is a MUST VISIT and is at www.dlslawyers.com/land_tax.htm

Please visit the site and add your comments to this thread.

[bobby]

GlenC

Thanks. land tax is a cancer. how much does the government want...capital gains tax, stamp duty, tax on any income that is positive, land tax. what sort of crap is ctg anyway...tax on a profit???? another labor government initiative (Bob Hawke), didnt they also try to abolish ng in the eighties??


Bobby

[handyandy]

Hi Gelnc


Interesting point made on the site you refered to, this is to do a state tax as per the council rates, applying it to all property owners. Based on a quick calc, that would cut my 'state tax' by half.

Part of the problem with the current system is that not all rental property owners have a land tax bill and as such their rental recovery level can be lower in comparison to those properties that have a land tax component.

Thus if for aguments sake 80% of landlords own 1 rental property, which would currently be excluded from land tax (NSW), suddenly had to pay an extra $300+ in expenses then I could see a general upward pressure in rents to try and recover that money.

Quote as per site---


Growing community outrage and political bickering over the manner of assessing and collecting land tax in NSW has made it imperative to reform the current system.

At the present time, only 85,000 out of 2,500,000 properties are saddled with paying $9,000 million dollars in land tax collected annually. This is unfair and inequitable.

In 1993, the NSW Government Pricing Tribunal into the assessment and collection of water charges stated unequivocally that "cross subsidies should be eliminated as rapidly as possible."

The same principle should be applied equally to all property owners in the assessment and collection of land tax.

A submission to the 1998 Inquiry into Land Tax Changes was prepared by the former principal of DLS, Mr David Singer and by Mr Sam Spitzer a property investor who was closely involved with the 1993 Government Pricing Tribunal into Water Charges.

This submission has already been adopted and supported by the Property Owners Association of New South Wales and the Eastern Suburbs Land Tax Action Group.

It shows that land tax can be fairly distributed among all property owners if an amount of land tax is levied equal to one third of the council rates currently being paid on each property. This means that a property owner paying $900 in council rates will pay $300 in land tax and a property owner paying $3,000 in council rates will pay $1,000 in land tax. All exemptions and rebates currently allowed in relation to council rates would equally apply to payment of land tax.

Our proposal calls for the abolition of the Land Tax Office, for local councils to collect the land tax on behalf of the state government and for councils to receive a fee for this service.

The submission as presented to the Inquiry is set out in the following section. It is the only submission made to the Inquiry that recognises the need to preserve the revenue currently being raised by government from land tax whilst at the same time presenting a solution to the unfair manner in which land tax is currently being collected.

It is no secret that the current system is imposing great financial and emotional stress on a large number of people in the community including pensioners, self-funded retirees and tenants of both commercial and residential properties.

It is time reform of land tax occurred. We welcome your interest and trust that you will fully support our initiative by contacting us or your local council mayor, the NSW State Premier, Treasurer or any Minister, your NSW State Government member, or the various interest groups listed below



Cheers

[Gill Bates]

I hate to say it , but i cannot see the government changing this tax , :(

Reason, making changes so it was imposed on every property would make it a sensitive election issue, where as number of property owners probably do not have much effect many election votes.

I think it should be indexed to land values.

I pay a significant amount of land tax. In QLD the land value used is the average of the last 3 years valuations.

I read articales in the local paper , about how rents in my area have risen by say 30 % in the last three years , well by the time land tax and ( council ) rates are taken out their is not much of a increase to landlord.

[handyandy]

Hi GB

I absolutely agree with what you say. Maybe the way to change the base is to have land tax apply to all non ppor with no threshold.

At least then all rented properties have the same cost base.

The second adjustment could then be an add on to council rates calling it a state levy thus over time including all properties in the state tax net which at least then means all property owners are contributing to the states upkeep.

Now what about the renters of the world, maybe a poll tax :)

Cheers

[skater]

In Tasmania you pay Land Tax on any property you own. I just received my bill of $66.00 for my one Tassy property. This is better way of doing it.

[GeeVee]

My question in relation to the topic is: When does the state revenue office calculate your landtax liability or do you have to get you accountant to do it? Does it happen automatically? They just notice that you have XXamount of taxable land and you owe us$XX??

[glenC]

I am not sure how the system works in Victoria, however Land Tax in NSW is levied on the Unimproved Capital Value of the property as assessed by the NSW Government Valuer General.
Land Tax is levied at the amount of $100 plus 1.7% of the aggregate value of all property owned by an entity above the current (unrealistically low) threshold of $317000.
An entity (for threshold purposes) under NSW legislation is a single owner or a couple. If a couple were to split their portfolio into two equally valued groups, then they would have the advantage of two $317000 thresholds, thereby reducing their Land Tax exposure.
In Queensland, I believe that each individual has a threshold, even if the property is owned in joint names.

As the reports in the web site (suggested above) show, the majority of properties in NSW have been grossly overvalued (some by as much as 50%)by the Valuer General since the current Labour Government came to power. There can be only one reason for these overvaluations. To rip extra money off property owners.

The VG notifies property owners of the valuation amount for each property, it is then up to the owner to assess whether they are liable for Land Tax and submit a return.

If for instance one property is owned and the UCV is under $317000 then no return is required. However if that one property of a combination of properties have an aggregate UCV over the threshold, then an initial return will have to be submitted and any future adjustments to the portfolio will have to be notified. Tax will be levied using the formula above. Hopefully the threshold will be raised very substantially this year (pigs might fly) to compensate for the recent dramatic increases in UCV.

[PT_Bear]

I don't pay land tax yet, but I'm not far from it.

Frankly I'd be happy to pay to have a lobby group to have a decent review of property taxes and equitable tax reforms implemented.

I believe it's wrong that we pay taxes:


When we buy.
When we sell.
On the value of the property in the meantime.

I'm happy to pay tax on any profit I make, but until I make a profit, why should I be taxed. I also believe that the losses I make should be contained within that asset class, offset either until I make a profit, or until I do sell.

Keep in mind that most of us are doing this to fund a retirement of sorts. By investing wisely, I intend to be in a position where I don't cost the taxpayer money in pension allowances. Isn't it better to encourage the public to retire on their own dollar than on that of the taxpayer?

[glenC]

I agree with PT Bear that profits and losses should be contained within that asset class. For instance in the States, if an investor sells an asset and reinvests the money in the same type of asset he is not taxed. ie no Capital Gains Tax unless he decides to keep some of the profits for his or his companies personal use. This helps to encourage investment and the Government gets its taxes when investment money is kept for other purposes.

Why should we be paying taxes on an asset when any gain on that asset is only realised when it is sold?

[handyandy]

The USA also has local, state and federal taxes that you pay. I believe that the basis of the local and states taxes are property related (but not sure) as i have read somewhere that these taxes vary based on proximity to services such as shools.

The point is that the State still needs to pay for their related community costs, such as hospitals, education roads etc. The money has to be raised somehow and land tax is unfortunately one of the vehicles.

The problem with land tax is that it targets a select few for a lot of money.

"At the present time, only 85,000 out of 2,500,000 properties are saddled with paying $9,000 million dollars in land tax collected annually. This is unfair and inequitable."

The idea of spreading the base from which a state tax is collected has merit and imho should be the path to follow as the State will still need a revenue stream and will not do away with a land tax scenario unless there is an alternative source of funds available.

Cheers