At last, land tax relief for investors

Thanks HK.

I agree with you, it's only tweaking the edges. They earn too much from property tax to consider doing much to it.
 
Another article about land tax in the smh
Land tax shock: 89% rise in one year


WHEN Victor and Elaine Mullin received their latest land tax bill, their first reaction was shock.

"It's crazy. It went up 89 per cent in one year," Mr Mullin said yesterday.

The couple, in their 80s, had planned to fund their modest retirement lifestyle with income from their investments.

But their plans look set to change after the land tax bill for their two-bedroom weatherboard cottage in Manly's Smith Street rose from $4402 last year to $8340 this year.

"I'll have to sell it. I have no option," Mr Mullin said...
Click to expand...
However, they have owned the Manly cottage since 1959 (which is only mentioned in the last paragraph)- I don't think that they will get much pain from selling an IP there- they will be extremely well off.


[afterthought]It's hard to tell. But I suspect that it's not in fantastic condition- it doesn't look very kempt. A cosmetic reno, which might cost about as much as the land tax, might be able to increase that rent enough to keep it going as a rental. But even despite that- the capital gain they would make would be enough to keep them EXTREMELY comfotable from now on.[/afterthought]
 
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geoffw said:
Another article about land tax in the smhHowever, they have owned the Manly cottage since 1959 (which is only mentioned in the last paragraph)- I don't think that they will get much pain from selling an IP there- they will be extremely well off.
Click to expand...

Geoff,

When they sell they will need to pay CGT. Then any money in the bank will be deemed to earn interest at commercial rates. Even if not invested the deemed interest will be calculated as earned income and be lioable for tax.

The government want people to not rely on handouts, yet continues to punish anyone who plan to be self funded. When the time comes I think I'll sell and move offshore.

Regards

Andrew
 
Their land tax bills will probably, over the course of a few yrs, add up to more than what they paid for the property in the first place :rolleyes:

Unfair tax levvied by a greedy state govt who spend more on spin doctors than anything else useful.....
 
Bargain Hunter said:
When they sell they will need to pay CGT.
Click to expand...

I thought CGT was only paid if the asset was acquired after 19/9/85?

So if that's correct, they will have a huge tax-free windfall if they sell. I'm also sure that they'll be able to do get a much better return than the current 2% yield they're probably getting now if they chuck it at some MF's.

At their age i'm sure they're probably more interested in cashflow than any further cap growth. I think they'll be fine.
 
And my vote

KL1

You get my vote too! What the hell do state governments do that the federal government can't? They're just a waste of money and and a pointless layer of beauracracy.

Tubs.
 
i have to write out a cheque tomorrow for stamp duty ... $12,031. :( ouch

what extra do i get for my $12k, i may ask?
 
lizzie said:
i have to write out a cheque tomorrow for stamp duty ... $12,031. :( ouch

what extra do i get for my $12k, i may ask?
Click to expand...

If you don't mind me asking. How do you fund something like that Lizzie? LOC or are your places all CF+'ve or are they CPs where the tenants pay for you?
 
unfortunately loc with the funds allocated specifically to the property ... have to have very good bookkeeping when using a loc for new purchases.

when the new purchases is value added, it gets revalued/refinanced and the loc is paid out again - ready for the next one.
 
lizzie said:
when the new purchases is value added, it gets revalued/refinanced and the loc is paid out again - ready for the next one.
Click to expand...

Lizzie, how do you do this? Are you saying that after a reno or some time has lapsed and the property has gone up in value, you get it refinanced through the same lender?

So that when they come to revlaue it they say 'great reno lizzie, we reckon it's worth another $40k so we'll give you another 80% of that, being $32k'. And then you use that $32k to pay off the LOC? Isn't the result the same as you now have the same level of debt?

Is the main advantage that you pay a little less on the term loan rates (say 6.8%) than the LOC rates (say 7.2%) plus you've got the LOC to use again for whatever purposes?

Am i on the right track?
 
yes - same level of debt, but its moved to a fixed io loan to free up the loc for next purchase deposit (or reno funds or whatever). i just like to keep my flexiable investing money flexiable.

basically every couple of houses i buy something that can be extensively valued added, then use the equity on that to clear everything off the loc and start again.

for example, currently i have the deposits for 3 properties on my loc, but with the revaluation of the latest project (knock down ande rebuild) i am able to clear those deposits off and have already bought the next house. i just have to be very careful on how everything is allocated.
 
I know it's an old tired issue, but is there anyone out there that can confirm:
1. What the land tax threshold was originally with the Carr government?
2. When it was changed to a $0 threshold and for how long?
3. When the Iemma government changed it back and what the current threshold is?
Am having a bit of a battle with the Revenue Police...
 
hrhpablo said:
I know it's an old tired issue, but is there anyone out there that can confirm:
1. What the land tax threshold was originally with the Carr government?
2. When it was changed to a $0 threshold and for how long?
3. When the Iemma government changed it back and what the current threshold is?
Am having a bit of a battle with the Revenue Police...
Click to expand...


There were quite a few land tax changes in NSW between 03-06 including changes to both thresholds and rates.
The threshold was recently increased to $352K in NSW.
For the 2005 land tax year, NSW abolished the land tax threshold and the 1.7% rate above the then $317 000 threshold was replaced with a three-tiered rate scale, ranging from 0.4 per cent to 1.4%.
There was so much public uproar, however, particularly amongst one IP investors (and rightly so) that the NSW govt changed their minds (again!) and re-introduced a threshold for the 2006 tax yr.
Hope this helps....
 
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