NSW Land Tax - Watch Out

[Kathryn]

I rang the OSR (Office of State Revenue) yesterday to clarify a few things about land tax and what I found out is:

- It is calculated on the total value as an entity...in other words, if you own jointly with your spouse you don't use half the amount per person, you use the whole amount (contrary to QLD which is based on individual ownership).

- It is based on what was owned as of 31 December each year and has nothing to do with filing your tax return, it operates on its own.

- You must initiate the land tax filing. As the OSR relies on several other govt agencies to give them the info they can't possibly keep track of who owns what so it is up to the landowner to "know" that they have to file a return.

- Do not go by the land value that is on your rates notice as they are only updated every few years. This is what caught me by surprise....my property that was $165k land value on my rates notice is now $233k! You only need one or two ips and you're up for land tax. You can ring the OSR and give them the lot number and DP number and they'll tell you the current land value.

The state government is out of control. They've virtually doubled the land values and are laughing all the way to the bank. I went from "possibly having to pay land tax" to "ohmigod..how much am I up for?"

Anyway, just thought I'd let you know what I found out because there are probably a few unsuspecting ip owners out there. If you're not sure, ring the OSR and get a value on your land. But make sure you do it before the end of April as that is the deadline to file.

Happy Filing,
Kathryn

 

[Alan H]

Yes. Land tax is becoming a bigger and bigger issue for investors and I for one am getting bloody angry about it. I won't hold my breath but SURELY some degree of reform is necessary.

I don't mind paying a fair level of tax but with the multitude of taxes surrounding property investment now it's starting to get a tad out of control.

Your point is spot on. Land tax is increasingly becoming something MANY IP owners will be experiencing........not just the very top end of town.

Ironically, being a State based tax, all these inceases will do is pressure investors to buy more interstate property(or not buy at all) to limit their exposure. If I was levying a tax I'd rather have a little of something rather than nothing at all!

Another irony is that probably one of the most common reasons for us to undertake IP investing is to provide for our retirement and not be a burden on the social security system. The direction land tax is heading is hardly likely to encourage this self-funded mentality.

We may have a tax burden but we also have a vote. Maybe over the coming years we should become MUCH more active in directly expressing our concerns in the ballot box.

 

[Alex Investor]

I am with Alan H on this one and other who share the same view.

Cant we start an action group and do something about it? How about all of us turn up at the OSR and protest?

Not very happy!

I also am buying in other states becasue of Land Tax.

Alex

 

[geoffw]

Kathryn,

What is the land value in NSW for land tax to kick in?

 

[XBenX]

geoff - $261K

we have no hope of land tax reforms dont forget we are less than 10% of the population

a better cause would perhaps be stamp duty

 

[Sim]

Alas, land tax is seen by most as a "wealth tax" - tax those scummy rich people (the ones who can afford investment properties) and use that money for the greater good like schools and healthcare. It's a difficult battle to win !!

 

[mitch]

l think if more of our taxes were used for things like schools and healthcare and less for things like topping up the poor performing super funds of those controling the purse strings , the people paying those taxes may not be so displeased when the topic is raised

 

[Sim]

Agree... I don't have a problem with paying taxes... but I do have a problem with how that tax money is usually spent !!

 

[handyandy]

An idea for getting the land tax dropped alltogether.

All landlords give each tenant a bill, distinct from any rents paid, equating to the lax tax for that property. Suddenly increased our voice from 10% to >50%.

I can just imagine to reaction (practicalities aside) seeing the government could not even implement the GST on rents.

Just dreaming and by the way, Sim, you can have my bill seeing you don't mind paying

Cheers

 

[Pele]

Gday

I dont even own any property but i am angry about land tax. I agree with simo and mitch, the way the govt spends its tax reciepts makes me sick. And the land tax threshold for trusts is $0 i beleive. This makes a huge difference to any Sydney property.

Pele.

 

[geoffw]

The land tax threshold for ACT properties which are let out is also $0.

Which offsets the 100% deduction of stamp duty of purchase.

 

[NickM]

Guys

i advocate that each and every one that receives a land tax assessment lodges an objection.

You should still pay the assessment so as to not incur interest charges.

The objection should be along the lines of the property being overvalued.

If every land tax payer takes this action hopefully the authorities may realise the extent of the problem.

I have also submitted a letter to Alan Jones addressing land tax and stamp duty in NSW. He has been a strong advocate against land tax and hopefully he will keep running with it.

Letters to local members and the opposition may also rustle some feathers.

NickM

(If anyone wants a "draft" obejection please email me and i am happy to provide one )

 

[Les]

G'day NickM,

A converse thought ...... I've heard (via radio) that land values in NSW have "screamed" upward - sometimes as high as 100% in one year.

Now, I KNOW that the exemption for NSW was around $200k about two years ago - so, if land values have screamed upward, WHY has the exemption not done likewise ??????

I'm not right up with NSW as I don't buy here - but you can see what I mean. Tax Creep is alive and well (and maybe objected too most stringently, I would've thought..... )

Adds weight to an objection, yes???

Regards,

 

[NickM]

Les
You are right
The threshold moved from $205K(approx) to $220K to $261K in 2003.

Our NSW Govt has absolutley raked in the $$ since the introduction of the GST. Not only has land tax escalated their revenues but so have both stamp duties and payroll taxes.

Why do we have to pay a tax on a tax ?
ie Stamp duty on the GST Inclusive price of property sold.

I received a reply today from Alan Jones regarding my email last week:

Dear Nick,
Thank you for your e-mail regarding the regressive land tax, stamp duty and payroll tax.
You have really hit the nail on the head with these three very unfair imposts on mostly the middle class and self-funded retirees particularly hard.
I will keep on about this and hopefully we will chip away for long enough to get some sort of repeal of these iniquitous taxes.
With best wishes,
Alan Jones

I hope he takes it further, but i guess that South Sydney is probably taking a priority at the moment ! (Rugby league for the interstaters)

NickM

 

[Jas]

As far as it being a tax for the rich goes, bracket creep has meant that many people now have to pay who didn't before.

Go that property boom!

Seriously, different states, different owers (read entities) are the only way to go.

Jas

 

[Jacque]

Different entities, yes. However, it sucks big time when one of those entities (family trust) is not even exempt at all. This means I pay from $0 for two of my houses- a fact that makes me see red! Land tax has effectively wiped out my small income stream from such properties, and I do struggle with this, and it's implications.
Good on you NickM for being so proactive with your complaints. I, for one, intend to lodge a complaint along with my land tax cheque and write to all local members.
* Jacque has another grumble or two*
Bloody taxes!

 

[michaelg]

Hi,

Wouldn't be nice to write to your lender and say;

"Dear Banker,

Today I received a bill from the OSR for a request to pay my land tax. According to my last loan statement I have 20% equity in my home, according to this, you still own 80% of my property.

I have calculated the tax bill and have determined your 80% portion to be $x, please indicate how you will be paying for this, you may either send the cheque directly to the OSR, or ask that included your cheque when I submit my own.

Note, you have 7 days to respond to this letter of demand, failure to comply with this request may incur a penalty fee.

Your Joint Venture Partner
xxxx"

Just a thought
Michael G

 

[bundy1964]

Hi

While I have no NSW investments, the stab in the dark approach used by Adelaide City Council has saved me on land tax. They use a % of the yearly rent and value the property at that

They have given me a valuation of under 10K, I could buy 5 city offices and still be under the 50K limit

bundy

 

[photo guy]

The crazy thing is it is a tax designed for the rich, which in reality is passed directly to the poor, the tennant in his rent.

Our tax system needs complete over haul, again.

 

[Lily House]

Good one Michaelg
lol
Lily