Land Tax - NSW

[thesuperman]

Say you buy property in individual names in the below ways (Say you have 3 people in a family). By structuring your property purchases this way would there be no land tax since each way will get a land tax threshold?

1. Person A
2. Person B
3. Person C
4. Person A + B
5. Person B + C
6. Person A + C
7. Person A + B + C

 

[danwatto]

My basic understanding is - If the threshold is 400k, buying in individual names gets you 3 full thresholds for a b and c.

So 1.2m total.

Then any joint purchases get their own 400k threshold - but it takes into account your individual holdings in the calculation. So joint buying does not avoid land tax and it at first seems like you'll pay it twice. However I believe there is a credit back for any land tax paid already.

Also if you buy joint from the start, you have only one threshold which you must SHARE, so only 200k each (if 2 people) , or 133.3 each (if 3 people) to total of 400k. So preferably to buy in single names 400k each, which gets you 800k total threshold for 2 people or 1.2m for 3 people. After you all hit the threshold it doesn't matter anymore and then you can buy however you want..

An accountant or lawyer can confirm more precisely but this is how my accountant girlfriend explained it to me.

 

[Paul@PFI]

Dans on the right track.

In NSW there are primary and secondary LT assessments. Each joint holding is first assessed. (ie 4, 5, 6, 7). If the threshold is exceeded then a assessment issues to the joint owners.

Then there is a secondary assessment. Each individual owner receives an asst notice in SOME instances. OSR accumulate the value of all land personally owned PLUS share of the land owned jointly. Then assessed. If its taxable then they actually issue the notice and give credit for a share of the tax paid on the join land to prevent double taxation.

Secondary assessments aren't issued if there is no additional land owning beyond the joint land.

So there is no double dip by combining different owners unless each of those owners is a Company or a SMSF. You can multiple dip thresholds sometimes if each owner is a fixed trust AND all units are company owned however.....That comes with a load of other tax issues. Also the unimproved land value of each property needs to be considered.

Be wary of using children too. OSR can determine land is on trust (Clause 11 exemption can see PPOR issues lost)

 

[Terry_w]

E.g. $800,000 land value in NSW owned by A and B.

Jointly assessed on ($800,000 - $412,000) x 1.6% + $100

A also has a $400,000 property (land value) owned solely.
A is considered to own 50% of the $800,000 (ie. $400,000) so the second property will also be assessed as well as it takes him over the $412,000 threshold.