Land Tax

[dreamgirl]

Hiya,

I'm currently searching for another property in Western Sydney. It'll be my 4th property in NSW (incl my PPOR).

I'm starting to shudder at the thought of Land Tax as I'm now over the 387K threshold. It'll mean having to pay 1.6% tax on land value.

My decision to buy again in NSW is based on the fact that I can potentially generate dual income (Ie. granny flat). I believe this is not possible (legally) in other states.

My question is: does having to pay Land Tax deter you from buying more properties in the same state?

Cheers,
dreamgirl

 

[Rixter]

It can definitely increases ones expenses, but it really depends on your investment strategy and big picture goal/s.

Me personally I buy up to the threshold in each state and then move onto to the next state for portfolio diversification mainly, then land tax minimisation.

 

[BV]

My question is: does having to pay Land Tax deter you from buying more properties in the same state?

Yes it does a bit, so we have started buying in different names and SMSF and also buy apartments.

If the property is cash flow neutral or positive you won't care about the tax advantages so you can also buy in your kids names

 

[dreamgirl]

It can definitely increases ones expenses, but it really depends on your investment strategy and big picture goal/s.

Me personally I buy up to the threshold in each state and then move onto to the next state for portfolio diversification mainly, then land tax minimisation.

Thanks Rixter.

I have bought properties in Qld & VIC in the past in order to minimise land tax. But my investment strategy has somewhat changed to buying in NSW because you can legally rent a granny flat out separately, unlike in other states. (Anyone please correct me if I'm wrong on this one.)

However, I've worked out that it'll cost me $77/week in land tax for every property with land value of 250K. This will definitely eat into the extra cashflow provided by the granny flat. Not to mention the fact that it may take 5 yrs to recoup the cost of building a granny flat.

 

[dreamgirl]

Yes it does a bit, so we have started buying in different names and SMSF and also buy apartments.

If the property is cash flow neutral or positive you won't care about the tax advantages so you can also buy in your kids names

Thanks Bill.

I have only purchased houses. Haven't been inclined to buy an apartment coz I believe that land appreciates and building depreciates.

Buying in kids names is not an option for now, or he'll loose his FHOG stamp duty exemption. On top of that, the loan will be in my name, so the bank won't like the idea.

 

[Telejazzer]

How about buying through a Trust? No, I won't be able to contribute in this area (yet). I'm hoping somebody from the forum would jump in and shed some light on this (Trust) matter.

 

[dreamgirl]

How about buying through a Trust? No, I won't be able to contribute in this area (yet). I'm hoping somebody from the forum would jump in and shed some light on this (Trust) matter.

Most states have no tax free threshold for trusts.

 

[lizzie]

How about buying through a Trust? No, I won't be able to contribute in this area (yet). I'm hoping somebody from the forum would jump in and shed some light on this (Trust) matter.

nsw has no threshold for trusts ... you pay from the first dollar. learnt that lesson the hard way