Land Tax - Greedy Labor Government!!!!

[TheAnalyst]

Just received my Land Tax Bill (WA). I did not read it but paid in full last year. Because I have time this time and read it. I found that you pay AGGREGATE land tax NOT based on individual land holdings. The government has the $150000 free threshhold BUT that is an aggregate figure. For example: if you have ONLY one block worth $149999. You pay nothing on land tax; but if you have 10 $149999. You will pay a lofty $2542 + 1.62cents per daller value over $875 000 == $12677.

Although land tax is an unreasonable tax on people, it is so stupidly calculated.

How bloody stupid / clever government!!!.

I will NEVER vote for labor.

 

[alexlee]

So you paid it in full last year without even reading it and it obviously didn't affect your lifestyle. You've said yourself that you've made seven figures with Perth property. Land tax is just a cost of making that fortune. What's the problem?

I'd rather go out and make more money and buy more property instead of thinking too much about taxes, unless there was a way I can avoid it. With land tax you're pretty much trapped.
Alex

 

[Brinkdude]

Land Tax - Greedy Labor Government !!!!

Your thread title could apply equally to all States and Territories not just WA.

 

[Kennethkohsg]

Land tax is just a cost of making that fortune. What's the problem?

Alex

***************************
Hiya Alex,

1. As I am given to understand, the WA State Govt has previously agreed with the Federal Govt that it would eventually cancel the stamp duties for land/property charges as well as other STATE level taxes when the GST Legislation was first implemented in 2000.

2. It has thus, failed to honour its own words and pledge given to the Federal Govt, as a State Govt, to date.

3. Thus, can we continue to believe in this State Govt for their words of honour or/and for what they are presently doing for the local residents here in WA?

4. Now that land costs/price in WA, has increased from $75,000 in the Anchorage Estate in 2003 to more than $270,000 per vacant lot in 2006, a 300% increase over a 3 years period, locking out a lot of future home buyers in WA, do you expect these young voters who are being pushed out their own housing markets in WA and of their own Australian dreams due to land/housing affordability related issues, to continue vote for them again in WA in the near future?

5. Having said this, I am not suggesting that the_Analyst is a young person.

6. The_Analyst, being a older voter and a land/property owner, was also badly hit, too, through this A$12,677 worth of land tax charges, in 2006, unfortunately.

7. As the WA State Govt has continued to collect stamp duties on these new land transactions after receiving a big chunlk of the GST tax collection revenue from the Federal Govt and has continued to heavily tax the old voters on their land/property holdings via the land taxes, it does not appear to be a "reasonable" Govt at all. This is despite repeated calls from REIWA and other industry leaders to abolish some of the state level taxes regime to help the first homebuyers.

8. Thus, it is no wonder, the_Analyst is both frustrated and angry to be left wondering for himself as to why the WA STATE Govt has to be so "greedy" and whether the WA State Govt is actually working for themselves to pay their own Ministers a high salary with good annual performance bonuses or/and annual pay increases or sincerely working to better serve its voters here in WA, as it has claimed itself to be?

9. It is not as if actual supply of land in WA, is truly and really scarce as it is in Singapore.

11. Hence the ongoing "land vs housing affordability" issue debate between the Australian Federal Govt and the various ALP State Govt.

12. This is where I believe this is real crux of the issue being highlighted for our present discussion.

13. For your kind update and further comments/discussion, please.

14. Thank you.


regards,
Kenneth KOH

 

[Kennethkohsg]

I'd rather go out and make more money and buy more property instead of thinking too much about taxes, unless there was a way I can avoid it. With land tax you're pretty much trapped.
Alex

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Dear Alex,

1. Please note that "tax avoidance" is illegal in Australia (and I think it is preferable and safer to re-phrase the term in your a/m post) whereas "tax minimisation" is legal for every Australian tax residents here, to try to minimise their tax liabilities, to the best that they can, as allowed and be legally permitted by ATO, to do so.

2. For your kind update, please.

3. Thank you.

Cheers,
Kenneth KOH

 

[alexlee]

1. Please note that "tax avoidance" is illegal in Australia (and I think it is preferable and safer to re-phrase the term in your a/m post) whereas "tax minimisation" is legal for every Australian tax residents here, to try to minimise their tax liabilities, to the best that they can, as allowed and be legally permitted by ATO, to do so.

Poor choice of words on my part.

1. As I am given to understand, the WA State Govt has previously agreed with the Federal Govt that it would eventually cancel the stamp duties for land/property charges as well as other STATE level taxes when the GST Legislation was first implemented in 2000.

2. It has thus, failed to honour its own words and pledge given to the Federal Govt, as a State Govt, to date.

3. Thus, can we continue to believe in this State Govt for their words of honour or/and for what they are presently doing for the local residents here in WA?

4. Now that land costs/price in WA, has increased from $75,000 in the Anchorage Estate in 2003 to more than $270,000 per vacant lot in 2006, a 300% increase over a 3 years period, locking out a lot of future home buyers in WA, do you expect these young voters who are being pushed out their own housing markets in WA and of their own Australian dreams due to land/housing affordability related issues, to continue vote for them again in WA in the near future?

I don’t care, to be honest. So governments renege on their promises. So they try to pile taxes on us. I don’t think the opposition will stick to their promises any more than the current govt. I just view rates and laws are part of the rules of the game. Parties come and go. Land is forever!

6. The_Analyst, being a older voter and a land/property owner, was also badly hit, too, through this A$12,677 worth of land tax charges, in 2006, unfortunately.

The Analyst has posted on more than one occasion that he made more than a million on WA properties. He managed to pay last year's bill without even looking at it and it doesn't look like it has affected his lifestyle. I’m not feeling sympathetic.

7. As the WA State Govt has continued to collect stamp duties on these new land transactions after receiving a big chunlk of the GST tax collection revenue from the Federal Govt and has continued to heavily tax the old voters on their land/property holdings via the land taxes, it does not appear to be a "reasonable" Govt at all. This is despite repeated calls from REIWA and other industry leaders to abolish some of the state level taxes regime to help the first homebuyers.

8. Thus, it is no wonder, the_Analyst is both frustrated and angry to be left wondering for himself as to why the WA STATE Govt has to be so "greedy" and whether the WA State Govt is actually working for themselves to pay their own Ministers a high salary with good annual performance bonuses or/and annual pay increases or sincerely working to better serve its voters here in WA, as it has claimed itself to be?

So the govt is unreasonable and greedy. If you haven’t noticed many people level call investors that, too. I’m still not seeing the issue (though as you know my sense of morals is, shall we say, much greyer than yours. Land tax is part of the law. The law is part of the rules of this game we play.

I just think it’s a waste of energy to be frustrated and angry over something we have no control over. I’d rather use my energy to make more money.
Alex

 

[lizzie]

You will pay a lofty $2542 + 1.62cents per daller value over $875 000 == $12677.

man - you got it good. our threshold in nsw is a mere $352k. if it were the $875k here i'd have a very small bill to pay - instead of the around $11,000 that i have.

 

[geoffw]

Another frustration I've had- with NSW land tax- is that it is calculated on what you held on December 31 of the year. If you settled on the property on December 21, you still have to pay the land tax for the entire year.

I got caught by that. I didn't realise that this was payable- and I also had to pay a penalty for not having paid by the due date.

But, having sold the same property in November, I was surprised- even staggered- to receive a big fat envelope from the NSW OSR last week.

Yes, it was a bill for $0.00. Complete with three pages of explanation about the way they had changed the averaging system for land tax.

I'm not sure if I have to post a cheque for the amount, as BPay doesn't let me pay the due amount.

Hehe. I'll pay 1c, and cause all sorts of administrative overhead

 

[TheAnalyst]

Alexlee,

1) I donot mind FAIR tax.
2) I am saying - Aggregate WA wrong. Like, shire rates, water rates, if it is based on individual property, I do not have problem. The AGGREGATION hurts badly. The high the aggregarated value is the hight land tax rate applies ----- that is WRONG.
3) I hate very high tax. For example: stamp duty is also based on the value -- the higher value is, the higher RATE applies. Why? I thought it should be universal -- say 1.5%. But in WA, for $1m property transaction, the stamp duty is about $40k, the greedy seller fee (agent fee) about 2.5%. Together the transaction cost would about $65k --- which is ONE year 5-7 year experience engineer salary (pre tax). This makes the property investment even harder.

That is why I hate these state labor government!!! they do not delivery on their promise. They are anti-properity (wrong spelling), rather than encourage people get rich, self-independant (not relying on government). They do not know how to stimulate economy but put more tax on people.

I am wondering given the relecent industrial relation reform case in the high court. Whether as a class action can beat the WA government on their promise in 2000 as Kenneth said?

 

[Peter Parker]

That is why I hate these state labor government!!! they do not delivery on their promise. They are anti-properity (wrong spelling), rather than encourage people get rich, self-independant (not relying on government). They do not know how to stimulate economy but put more tax on people.

I don't think WA's economy needs any more 'stimulation' at the moment. If it contributed to inflationary pressures (inflation is a tax in itself, especially for those holding cash) and lifted interest rates then anyone with a leveraged portfolio would be worse off. Higher interest rates in a sick economy like NSW would be particularly unfortunate.

The main tax bases of state governments are narrow. They are mostly anti-jobs (payroll tax), anti-commerce (stamp duty) and anti-stupidity (gambling taxes). Oh, they also get a fair whack from Canberra (a Liberal/National government).

WA is unique in that it has resisted pokies, despite the huge tax windfall it would raise. If it can't depend on taxing the stupid for its revenue, it will have to find it somewhere else.

People talk about improving incentives by reducing taxes, but overwhelmingly it's those who already know the benefits of investing who'd benefit, not those who don't and are unwilling/unlikely to learn. Even if the government gives money away for saving, most people won't take it up (eg super co-contribution), so the number whose actions are changed by a tax change is likely to be less. And as it stands, there are already great incentives to get out of the PAYE system onto some other structure (investing or business) where more things are deductible and/or rates are less.

Peter

 

[lizzie]

But in WA, for $1m property transaction, the stamp duty is about $40k, the greedy seller fee (agent fee) about 2.5%. Together the transaction cost would about $65k --- which is ONE year 5-7 year experience engineer salary (pre tax). This makes the property investment even harder.

those rates are the same as nsw - believe me they hurt ...

 

[alexlee]

Personal opinion only, of course, but fair shmair. I just think with all the effort needed to change the laws, you might as well just think up ways to get around it (e.g. invest in other states). Otherwise just do better in other respects (better property selection, get a lower interest rate, structure your affairs better, etc).

I just think from a cost/benefit perspective, it isn't worth it to get too agitated about things that are hard to change. Better to concentrate on those things you CAN change, no?
Alex

 

[Peter 14.7]

Land Tax is Wrong.

Why.. because there is no equivalent tax on the sale of shares. Thus ot stuffs the fundamentals.

It could be argued if land tax was abolished more would invest in property thereby increasing the supply and actually lowering rents and slowing the increase the home prices. Lowering inflation.

Landtax increases costs and decreases supply therby raising inflation.

Housing is stable of life.

Share ownership is not.

Unfortunately the states are terrible budgetters.

Peter 14.7

 

[Bandita]

***************************
Hiya Alex,

1. As I am given to understand, the WA State Govt has previously agreed with the Federal Govt that it would eventually cancel the stamp duties for land/property charges as well as other STATE level taxes when the GST Legislation was first implemented in 2000.

2. It has thus, failed to honour its own words and pledge given to the Federal Govt, as a State Govt, to date.

This is so very very true! I was in Oz just under a year when GST was being campaigned and everyone was talking about all these others taxes (mainly land) going down as a result, and how much money they would save. All I could think was that they were all kidding themselves - never at the time thinking I'd actually be living here today ! But, I don't mind paying tax (only the fair due amount of course ), especially when I see it put to good use. However, believing that by paying more tax for one thing will reduce your taxes on another (and decrease your overall costs) is the same as believing that paying higher sinking fee levies will reduce your body corp fees - never seen it happen!

Cheers,
Jen

 

[sailor]

I know there is an increasing emphasis on "user pays", so could someone tell me what the state govt spends land tax on, please?

 

[JoannaK]

i got my bill yesterday and suprisingly it went down by $10,000...but it is still way too high, and i loathe paying it

 

[austini]

Hi Gang,

When you look at alternatives like shares the costs associated with property are rediculously high and seem to be getting progressively worse. Hence this is why I have no intention of purchasing any more and over time want to sell down the rest and move funds into a well diversified portfolio of dividend paying share based investments. Commission on buying and selling shares using a discount broker are a fraction of what it costs for property. There is no stamp duty to pay and no nasties like Land Tax etc not to mention ongoings such as repairs, renovations, property managers, insurance, body corp, rates and tenant issues etc. As for the usual arguement that property offers more leverage well I leave that for those who have a higher debt risk tolerance than me.

Cheers - Gordon

 

[willy1111]

I HATE PAYING TAX. FULL STOP.

Although I do pay it - all legally of course - but it doesn't change the fact that I hate paying it.

I think it is more the fact that I have to pay it, I don't have a choice. Well I probably do have a choice, but I don't like the consequences of not paying it.

 

[cendrillon]

Willy,

About the only way out of tax is to work overseas. If you pick the right country you can get rid a huge portion of income tax, plus GST, plus compulsory super contributions, plus HECS/SFSS repayments, CGT, tax on dividends, the list goes on and on.

That said, I believe you're still liable for CGT on Australian IPs even if you're non-resident in Australia unfortunately.

 

[Punchy]

Just received my Land Tax Bill (WA). I did not read it but paid in full last year. Because I have time this time and read it. I found that you pay AGGREGATE land tax NOT based on individual land holdings. The government has the $150000 free threshhold BUT that is an aggregate figure. For example: if you have ONLY one block worth $149999. You pay nothing on land tax; but if you have 10 $149999. You will pay a lofty $2542 + 1.62cents per daller value over $875 000 == $12677.

Although land tax is an unreasonable tax on people, it is so stupidly calculated.

How bloody stupid / clever government!!!.

I will NEVER vote for labor.

I take it you're hoping for valuations to drop?