Government to introduce 2.25% Levy on Sale of Investment ppty's

handyandy said:
Hi Peter

In regard to your clients inheritance your quote

"I have a client who just inherited $2.65M of property. He has no other investments. He worked 15 years as a carer to his Aunt for this bonus.

She paid Land tax at 1.7% and rates every year.

He had expected to pay agents fee, marketing, me and thats it. No CGT applies.

Now for no benefit the NSW gov will take on $2.65M $59,625 of his money."
Would this not establish a cost base at the time of the inheritance ie $2.65m, and as such the tax will not apply as he will not have made the 12% threshold!!!! Better still make sure that the valuations are done the ensure a slight lose on sale (particualrly in the current doom and gloom environment.

Just a thought

Cheers


Hi Handy

Good Point. When I find out, I will post.

FYI this client has decided therre are too many unknowns at the moment and is going to hold off. Another friend however has decided to sell her ex PPOR unit now IP unit. Question is. CGT gives 6 years grace for ex PPOR. What about carrs exit tax? :confused:

Regards Peter 147
 
I was wondering what the land tax situation is in other states.
I know Vic has a threshold for privately owned properties.
Can people enlighten me on the case in other states ?
 
Was interested to here that the NSW gov has suddenly found they have a 1 Billion Dollar Surplus for this year. That's a 1.3 BIll turnaround in about two weeks. :eek:

The Cynic in me thought there must be an election coming up , but that's federal.

See Change
 
see_change said:
Was interested to here that the NSW gov has suddenly found they have a 1 Billion Dollar Surplus for this year. That's a 1.3 BIll turnaround in about two weeks. :eek:

The Cynic in me thought there must be an election coming up , but that's federal.

See Change

Yeah SC,

but will they no longer have the need to tax investors to get back the so-called $600Million odd. I doubt it.

Anyway, I heard on a radio property program that these new taxes will only apply to properties purchased after the announcement. Have you or anyone else heard anything about this ?

Thorpey
 
It a rort

Good One Gee Cee

They must have found it ($1BN) in the pockets doing the washing!!

Also if this tax is fair how come:

1. Exit Tax applies to all IP!

2. FHO Stamp Duty Concession only to NEW Buyers?

Why not apply exit tax to those from date of announcement or legilasation? That's how they applied CGT post 1985.

and

What about those who inherit homes/farms and want to keep but not rent out? The Land Tax still bites.

Spoke to a tradesperson I know who promised his now deceased mum never to sell the family home. It on the central coast so she wanted it to be a holiday home for the family forever more.

He cannot rent it out but each year it will cost him $800 and rising. He now has to consider breaking his death bed promise.

And what about if you inherit a farm. My sister has just done so to a value of $0.5M. Does land tax apply. What defines a primary producer when the farm is in drought and hence no livestock.

This tax and duty will benefit professional investors first and the small investor last. That may seem good but overall it's bad for NSW.

It a rort, Peter 147
 
Hi see change
I work in a retail organisation.
If an operator gains or loses $10 or more from their register, they have to be spoken to in the office, and warned about further mistakes. If they are out by anything as outrageous as $100, there is almost uproar, and a national inquiry.
If I have worked this out correctly, that is .000076% of the amount the Gov has "found" in 2 weeks. I believe the word is incompetent. With all the TV adds and ranting re budget shortfalls, changing taxes to comensate, if it wasn't so serious, I would suggest someone buy them a bloody calculator. :rolleyes:
jahn
 
see_change said:
Was interested to here that the NSW gov has suddenly found they have a 1 Billion Dollar Surplus for this year. That's a 1.3 BIll turnaround in about two weeks. :eek:
Criminals!

If they have ANY decency whatsoever they will reverse the tax decisions of the last few weeks.

I hope people remember their incompetence & duplicity when the next election year comes round...unfortunately I will not be able to vote against them. However I do have assets affected by their decisions.

Cheers,

Aceyducey
 
Aceyducey said:
Criminals!

...unfortunately I will not be able to vote against them. ........................

Aceyducey

Well I can Acey!

And I can assure you come election morning, I will be running.......nay sprinting............to vote them out.

It's certainly angered me.......it will be interesting to see how this mini-budget affects Carr at election time.

If your listening Bob......rest assure, unless there are some changes......you've certainly lost a vote here!!
 
You have to remember that this is a Government that got in on a promise which they knew there was no way they could keep.

Namely to take the toll off the M4. This gave them enough Votes in the catchment area of the M4 to swing enough seats their way. Of course when they got in they found there was a Contract that stopped them from doing this.......

By the time the next election came around the voters had forgotten this.

The last election was early last year, and by the time the next election comes around , this new tax will be well and truly forgotten by the majority of voters who are not property investors.

Personally I dont like Bob Carr at all , but I do "respect" his ability as a "politician " . Bob Carr's biggest threat is Mark Latham getting in.

See Change
 
XBenX said:
Im suprised about the amount of negative sentiment regarding this extra tax, my initial reaction is the same as Geoff's.

Peter147 said:
Another friend however has decided to sell her ex PPOR unit now IP unit. Question is. CGT gives 6 years grace for ex PPOR. What about carrs exit tax?

Regards Peter 147

What have you to say about that XBenX/Geoff ?

There is no CGT in this case and yet the exit tax will still apply :mad:

Regards

Investor :)
 
Jum Jones mentioned that polies invest too. Bob Carr sure knew something when he invested in his couple of properties in New Zealand.
The recent changes to Land Tax and the introduction of the Exit tax have killed sales in the Real Estate market in NSW. In the last couple of days I have heard of six couple that have flown to Qld to look at investment property and have also heard that sales and enquiries in Qld have gone balistic. Just watch the prices up there go thru the roof.
With rental returns what they are in Sydney at the moment (static for the last four or five years and recently slipping backwards - we have just had four properties vacant at the same time, one that is freshly painted and well presented in a good area with asking rent reduced by $10/w has been vacant for over 10 weeks. Just finding the Land Tax on that one is going to be impossible let alone the other expenses.), by the time you take out rates, maintenance, bank interest and management fees and then add on the ever escalating Land Tax there is nothing left. They are really negatively geared.
Carr and Egan sure know how to screw up this state. The SOBs still get their pay and perks no matter what they do.
Egan even had the gall to say that we will get half of the exit tax back because it would reduce the capital gain on the property. GOOD ONE MIKEY!!!
Does he really think that we are that stupid?
They make me that mad that I say 'BRING BACK THE BIFF' :mad:
 
glenC said:
Egan even had the gall to say that we will get half of the exit tax back because it would reduce the capital gain on the property.
It will reduce the Capital Gains TAX on the property. So if you are on the highest tax bracket, you will half back.

Until the fed government ask for their little bit back.

But if lots of people are selling up in NSW and buying in Queensland, perhaps it's smart to be buying in NSW and not following the herd?
 
Hi GeoffW
Thanks for your reply. I agree with you about not following the herd.
It appears that a shortage in rental accommodation could already be occurring as more and more investors opt out of NSW.
We recently have had four out of six rental properties in Sydney vacant. One of those is in a good area and has been freshly painted, however it stood vacant for 10 weeks (ouch the Land Tax burden from that hurts, let alone finding the Mortgage repayments). Suddenly this week, all have been snapped up by Tenants.
The outcome that I envisage is that rents will increase due to the changes in Land Tax and the new Vendor Transfer Duty (Exit Tax). In fact I am suggesting that Landlords should add the following clause to their next rent increase letter:-
'Due to the recent changes in State Land Tax Legislation and the introduction of the State Vendor Transfer Duty, we are now paying $XX in Land Tax per week and unfortunately are having to pass some of this increase in overheads onto you. Other increases in Council Rates and Maintenance and a 40% on Building Insurance have also occurred.
We now find ourselves forced to increase your rent by (say $1/2XX) as of the __/__/__ to try and recover some of these additional oncosts.'

Thoughts anyone?

GlenC
 
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Attached is a "ready reckoner" on the stamp duty and land tax changes sent to me by an agent we keep in touch with in NSW. Could be handy for some.

The agent who sent me this works in the far south NSW coast. He reckons the market there is still strong but a lot of the tyre kickers have dropped out. There hasnt been any real change in selling activity in his opinion as a result of these changes.

Cheers
 
investor said:
What have you to say about that XBenX/Geoff ?

There is no CGT in this case and yet the exit tax will still apply :mad:

Regards

Investor :)

Sorry, havent been posting for a bit.

The reason the tax doesnt bother me is the fact that as a buy and hold investor the only impact on me is how it effects the rest of the market.

In one of my other posts I worked out what I thought the potential effect could be... again I felt it was negligible.
 
Opposition vows to dump tax

Hi All

On the news I saw John Brogden (NSW Opposition Leader) vow is elected he would abolish the 2.2% sales tax and the changes to land tax, but keep FHO stamp duty free limit to $500k.

Says he will do it through savings but Egan (NSW Treasurer) says it is not there.

Firstly, Good to see him acknowledging the TOTAL unfairness of a tax that applies even if you make a loss. A true first for any Gov.

Secondly, having worked in Gov there may be many fat cats but a lot of dead wood. NSW has no forced redundancy so I know of 74 year old still turning up and taking their $$ but of no real value.

FYI How does this loss occur?

If you buy for $100k and sell for $130k in ten years you have increased at approx. 3% average p.a. which is CPI. No real gain. Especially as you could get 6% from the bank no risk.

But that is 30% gain on base, over the 12% limit so you are liable for the tax. The 12% also totally excludes buying costs such as SD, legal (I have read).

I say a great article outlining this in the SMH Domain but could not find it on the web.

Will try again, Peter 147
 
We'll see if Brogden keeps his promise if he ever gets elected :)

Basically the fee on property sale will push more people interstate and to shares - they don't tax share profits the same way....

Cheers,

Aceyducey
 
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