How can I avoid land tax in this case?

[CraigD]

Hi guys,

This is the first thread I post in this forum...Recently I got a bill pay some land tax, so am wondering if there is any way I can avoid it in the next years? Here is my house purchasing history.

Late 2012: Bought our first home, let's say Property A, in VIC. It's under me (Craig) and my partner (Kim)'s names and is our PPOR currently. The loan is under both of our names as well.

Apr 2014: Bought an investment property B in VIC. The property and loan are under our names but actually my parents in law are currently living inside.

Aug 2014: Bought an investment property C in VIC. Again both property and loan are under our names. An RE agent is currently managing it for us.

Last month, I got a bill from the State Revenue Office saying $400+ land tax was payable since the land value of B+C is over $250k (A is exempted as it's our PPOR). Now my question is how I can avoid this land tax in the coming years? Can I claim that A is Kim's PPOR, B is Crag's PPOR and C is our joint investment property? In this way, as my understanding, A and B will be exempt from land tax, since C's land value is less than $250k, we'll stay away from this tax in the future? If this is possible, how can I achieve it? Should I notify SRO?

Thanks,
Craig

 

[danwatto]

You can't claim more than 1 PPOR and you need to provide evidence that you moved in (they ask for this in NSW anyway)

$400 is nothing. I wouldn't worry about it,and it's tax deductible.

If you could go back in time though, purchasing in individual names is better as you get a whole threshold each.

For future properties you can consider buying interstate and using a new threshold in each state.

 

[Peter_Tersteeg]

I don't think you can avoid future land tax. Your PPOR is exempt but you've got two other properties whose land value exceeds the threashold, so land tax is payable.

The Age ran an interesting opinion piece on Tuesday. Whilst it's fairly shallow and I certainly don't agree with land tax (for many reasons), it's an easy way for states to raise revenue.

http://www.theage.com.au/comment/land-tax-often-overlooked-in-the-tax-debate-20150407-1mfro2.html

Somehow I don't think trying to pass off one house as Kim's PPOR and another as yours is going to work. You're both owners of both properties, you're a couple (married or defacto), you only get one PPOR between you (the house you're actually living in, in this case).

The easiest way to avoid increased land tax in future would be to diversify into other states and keep under that states threshold.

 

[CraigD]

We have an IP in QLD and will probably buy the next one in SA.

Thanks for all the replies, much appreciated!!

 

[S.T]

Just get your parent in laws to pay the land tax bill, it's their fault you got it.

 

[skater]

At the risk of sounding callous, I've just got to say "suck it up, Princess". It is a cost of doing Business.

In the scheme of things, $400 is a tiny amount to pay and the only way around it is to purchase in different States..

I am against Land Tax, as it is an unjust and unfair tax that we've all got to pay once you get to the threshold. It sucks because the thresholds don't go up in line with land values, so it creeps up over time.

 

[Paul@PFI]

Just get your parent in laws to pay the land tax bill, it's their fault you got it.

Land tax is applied to land owners not tenants. The OP explains that B is an IP...They choose to have relatives rent it. Even with arms length tenants that land tax stands. No its the owners problem.

 

[Paul@PFI]

Now my question is how I can avoid this land tax in the coming years? Can I claim that A is Kim's PPOR, B is Crag's PPOR and C is our joint investment property? In this way, as my understanding, A and B will be exempt from land tax, since C's land value is less than $250k, we'll stay away from this tax in the future? If this is possible, how can I achieve it? Should I notify SRO?

Thanks,
Craig

People do try that and OSR aren't stupid. It would be detected immediately. Both A + B are jointly owned after all. You cant have different PPORs. ONE family home is exempt. Oh and in Vic there is a six month rule you might have missed. It would still fail at 31 Dec 2015.

B + C are IPs and I assume you claim tax deductions. You just got yourself a new one.

 

[S.T]

Land tax is applied to land owners not tenants. The OP explains that B is an IP...They choose to have relatives rent it. Even with arms length tenants that land tax stands. No its the owners problem.

It's in his name so of course it's his problem I'd still pass it on to them if I was him. If it backfires, I know a good family lawyer.