land tax and sale of proprety warning

i wanted to post this in the general discussion, because thought it might get lost in the tax/accountanting section - and i wanted as many people as possible to learn from this lesson.

a warning about selling property out of a trust/company ... we've sold our elephant (cooling off ended yesterday) and we've got a rather large land tax bill outstanding for various properties held by the same company, going back 5 years due to a string of stuffups by osr and accoutant (and therefore ultimately myself - ignorance is not a defence).

i've spoken to land tax about paying out the bill for "the elephant" at the time of settlement, only to be told that according to legislation "everything" outstanding and still owing by the company to the osr has to be paid out at time of settlement to release the one property.

so instead of a land tax bill of $7,500 at time of settlement and the balance paid off over the next 5 months, we have to pay $22,000 in one lump. it does mean that we then don't owe anything further - but heck! another $14,500 out of our cashflow.

going from bad to worse really!
 
Oh, Lizzie ... just when you think things can't possibly get any worse, something comes out of left field and says "Gotcha" - big time! :eek:

I do hope that this is the last nasty little 'surprise' and that it's all better news for you from now on!

Cheers
LynnH
 
ouch. yes land tax is one of those dirty little taxes that state labor govts have been robbing us all of. it doesnt sound like a lot of money till you get one big property or a few in one entity, then slug! the tax you have when you shouldn't have a tax. I saw eric ripper at cable beach club about a week ago and i wanted to get his pina colada and shove it in his face - seeing him there blowing my hard earned tax dollars that don't belong to him made me feel sick.
 
So where you said in another thread you would be able to pay it off over time you now find out they are takin' it all right now!! bloody hell what a pain.:mad:
 
So where you said in another thread you would be able to pay it off over time you now find out they are takin' it all right now!! bloody hell what a pain.:mad:

yep - because i need one of the four properties in the company released i have to pay off the debt owing on all four.

another trap for the unwary - which is why i posted here. the lady at osr said that even many accountants/conveyancers don't know about this ruling.
 
Hi ya Lizzie.

I always try to look for a positive in every negative. As pi$%#d as I would be in your situation, at least that rotten land tax bill is/will be paid off now in its entirety and you can move on without having to budget for it anymore.

Regards
Marty
 
i believe it's a relatively new thing....last year they would let me do partial clearances, but when it came time to arrange a few settlements recently they advised me that the rules had changed and there's no more partial clearances.

I got really stuck in to them and explained to them that they just can't change the rules like that without letting anyone know, especially people such as myself that are constantly buying and selling properties. I managed to convince them to allow me one partial release earlier this year, but when it came time to ask again, they flat out refused, and it did hurt...
 
...we've got a rather large land tax bill outstanding for various properties held by the same company, going back 5 years due to a string of stuffups by osr and accoutant (and therefore ultimately myself - ignorance is not a defence).
Sorry, what is osr? I haven't heard this term before.

Have you investigated potential legal remedies against the accountant?
 
Office of State Revenue.
So they made stuffups too? Do you have evidence of it? If you do, I'd get legal advice relating to their role in the matter, and what portion of blame potentially lays with each party. Once you have this advice, you'll be better placed to make a decision on your future.
 
Land tax, arrrrhhh I haven't been game to look at that yet but with the latest land values sent to me I think there is defiantly an elephant in the room that I shouldn't ignore. Do you think it will go away????? Please!!!!
 
Unfortunately theres nothing more we can do about the land tax situation as us investors are in the minority. Perhaps us landlords need to start adopting the English practice and pass on all theses additional costs as separate items unrelated to rent.

A bit off topic here but to JoannaK, is that your development which is on your sig? Very impressive indeed. Is it being built already or you looking at pre-sales to get the financiers to come to the party? Some very nice finishes too. Have you done a cost estimate? Wonder what something like that has come in at with the lifts, basement parking, pools..etc.. $3-$4k/m2?
 
So they made stuffups too? Do you have evidence of it? If you do, I'd get legal advice relating to their role in the matter, and what portion of blame potentially lays with each party. Once you have this advice, you'll be better placed to make a decision on your future.

no - the stuff up was that they failed to notice we were a trust, and trusts don't get a threshold, so we copped 5 years of threshold land tax in one hit when they realised their mistake instead of spread over 5 years. not good for cashflow

unfortunately you will find that there is no arguing with the government ...
 
Hi Lizzie,

I'm sorry to hear you have copped another blow.

Land tax is my most hated cost associated with property investing. But I have found a way to avoid it - I no longer invest in property. Nowadays its only quality dividend paying shares. Better income, no tenants, repairs, renovations, rates, PMs, land taxes, stamp duty etc etc. And the transaction costs are a tiny fraction of those associated with buying and selling property.

I just got so annoyed with State and local Governments using property as a cash cow.

Anyhow it is not my intention to turn this into a shares vs property debate. We still own a number of IPs but have grown tired of all the costs and hassles associated with property ownership.

Cheers - Gordon
 
i think you are spot on there gordon. there will come a time when govt realises (probably when rents have gone thu the roof) that taxing landlords isn't a free lunch. costs encourage economic behaviour, i.e. reduces investors in the market, reducing suplpy, increasing rents.
 
well, it could always get worse ... i heard yesterday of a guy who (on the advice of his accountant) borrowed heavily against his ppor to buy shares - the bank is foreclosed yesterday.
 
well, it could always get worse ... i heard yesterday of a guy who (on the advice of his accountant) borrowed heavily against his ppor to buy shares - the bank is foreclosed yesterday.

Hi Lizzie,

I'm probably in the minority here but I always maintain a low or modest LVR when borrowing whatever the asset. I have lost count of the number of investors who I know are in trouble at the moment both in property and shares from taking on too much debt and/or experiencing cashflow problems. Some have gone bust and others are having to sell assets at a loss to get out of trouble.

Cheers - Gordon
 
You can't win ...

unfortunately you will find that there is no arguing with the government ...

..Ain't that the bleeding truth. There's nothing like a "few rounds" with the ATO (or the OSR) to make you realise just how totally powerless you are as a taxpayer and as a citizen of this country. If you want some total joke comic reading, read "The Taxpayers Charter" published by the ATO. When you read it, you feel all "warm & fuzzy" and safe. When you feel their knife at your ribs you realise it's total bull excrement and there is no room for either discussion nor negotiation.

They make up the rules. They change the rules. These are fights the little guy just cannot win. It's a national disgrace.

LL
 
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