OMG! Victorian State Land Tax 2011-2012

[Rickardo]

Also got mine yesterday. After minor heart failure I realised that our PPOR (was an IP) was still listed on there. One thing that surprised me was they give you a lot less time to get the $ together this year, with the 1st payment due in about 3 weeks.

So, what do you do if wish to expand your portfolio in Vic? Set up a company or trust to hold each entity?

I'm still waiting on mine.

If you want to continue purchasing in one state the best ways to minimise the impost is purchasing in separate entities.

Sure, you’ll pay the trust surcharge in Vic but if you take a long term view, this additional short term cost will be more than offset by not paying tax on your newly acquired holdings at the highest threshold.

 

[The_Bludger]

Got mine yesterday! Grrrrrr...

With Land holdings over $1M in Vic, I'm bleeding. To be honest, it's the only thing holding me back from buying another. Probably would have had another 2 by now, but don't want to be paying the SRO $15K every year! That's a massive hit.

In order to purchase more IP's in a different entity in the same state and not get hit by massive Land Tax, is it a trust I need to set up? How do I go about doing that and what sort of trust do I need specifically?

 

[Rickardo]

Got mine yesterday! Grrrrrr...

With Land holdings over $1M in Vic, I'm bleeding. To be honest, it's the only thing holding me back from buying another. Probably would have had another 2 by now, but don't want to be paying the SRO $15K every year! That's a massive hit.

In order to purchase more IP's in a different entity in the same state and not get hit by massive Land Tax, is it a trust I need to set up? How do I go about doing that and what sort of trust do I need specifically?

Each separate entity has their own land tax threshold, this includes every individual, company, and trust.

So for land tax purposes it does not matter so much what type of trust, but you would want one that's new or that doesn't already own any land to maximise the benefit of progressional land tax scales. What type of trust for income tax purposes is a completely different question.

 

[Kristine..]

Bludger

In my opinion, that's like using a cricket bat to swat a fly

The cost of operating any corporate entity would be about the same as the extra Land Tax for that particular property plus you then visit complications upon that property for evermore.

There is no threshold in Victoria for properties held in corporate entities particularly in Trusts and there is a higher rate for Trusts up to the top bracker, so you would be paying Land Tax on the full value of the new properties

This problem - and in all truth, it is a nice problem to have - is because when we start out on this property investing journey, we none of us in our wildest dreams imagined that we would one day be looking at these Land Tax statements and feeling ill.

Our bill has increased by $3,000 from last years impost. That's another $60 per week - but it also indicates that we, too, have grown a decent portfolio which has held it's value during a difficult period in the market.

I have no intention of publishing our tax bill, but if the properties weren't in shared ownership the bill would have been about $6,000 more.

It is a common statistic that married people are wealthier than single people, and that people with children are wealthier than people without children.

How can this be?

It is simply that whenever we take on a new commitment, we rise to meet the challenge.

Mike and I have to and will certainly pay this bill, and in doing so will become wealthier. If we had no tax to pay, that money could have been frittered away on cabbages, which would not have been tax deductible.

At least Land Tax, like Rates and Insurance, is tax relevant.

So instead of us being off having a frivolous time, we shall meet this commitment and be that much better off by this time next year.

Actually, after the initial shock, Mike walked around all evening with a silly grin on his face. Nothing quite like seeing the value of your holdings in black and white.

When the 2012 Land Tax bill comes in it will be even more - and that represents more in the kitty for us to enjoy when we eventually hang up our boots.

I must admit that today I am still feeling a bit bruised but I will get over it.

Cheers
Kristine

 

[Gools]

It is a common statistic that married people are wealthier than single people, and that people with children are wealthier than people without children.

How can this be?

Kristine, not sure if it is the case in Vic but in SA 1+1=3. A married couple have the chance to hold property together and both individually so they get three tax free thresholds. Sure is an advantage when well down the track.

Gools

 

[Ms Jade]

Kristine, not sure if it is the case in Vic but in SA 1+1=3. A married couple have the chance to hold property together and both individually so they get three tax free thresholds. Sure is an advantage when well down the track.

That's amazing! And certainly not the case in Vic.

 

[lizzie]

So, what do you do if wish to expand your portfolio in Vic? Set up a company or trust to hold each entity?

i got stung by that in nsw on advice from a very ex accountant ... in nsw there is no threshold for companies or trusts, so was hit for land tax on the entire value. not sure about vic but be careful.

that year cost me $27,000 for the stupid setup.

 

[The_Bludger]

Mike and I have to and will certainly pay this bill, and in doing so will become wealthier. If we had no tax to pay, that money could have been frittered away on cabbages, which would not have been tax deductible.

At least Land Tax, like Rates and Insurance, is tax relevant.

So instead of us being off having a frivolous time, we shall meet this commitment and be that much better off by this time next year.

This is true, but I still hate Land Tax. I could take the family on a really nice holiday every year with that money, so it will either be an interstate purchase next or knock over one of my IP's and start a development(The next journey).

The way I look at it is that it's not bad to pay it once off, but over let's say 20 years, that could easily be a $200-300K difference to your retirement which is substantial.

 

[Kristine..]

Kristine, not sure if it is the case in Vic but in SA 1+1=3. A married couple have the chance to hold property together and both individually so they get three tax free thresholds. Sure is an advantage when well down the track.

Gools

Hi Gools

Yes, looking at our Assessments, it is the 3 x thresholds which have reduced the pain somewhat

Each purchasing entity - as Natural Persons - has it's own threshold

Bludger, yes I agree that over the life of the investments, once the threshold is surpassed the Land Tax can accrue to a considerable amount

However, when it is all said and done, I would prefer to have the investments than to not have them

Our long term plan had been to run with the accrual stage as long as possible, to allow the longest possible consolidation stage, before we move inexorably into the 'cull the herd' stage to provide for cash flow for what we hope is a very long and well fed retirement

But - and there is always a 'but’ - because property investing is a sort of logarithm-ic rather than a deliberate straight line plan of accumulation, the accumulation stage has no clear boundaries and therefore the cash flow is still flowing in to the portfolio because we have kept on buying!

Throw in another $xx,000 in cash input each year and it can be a tad inconvenient!

However, it is not a tax that any government is going to do much about as it affects only a relatively small part of the population. Commercial tenants with Dazz-type leases have to wear it, not the residential tenants and not the tenants of small commercial properties such as we have due to the provisions that Land Tax can be passed on only on a single holding basis. Our commercial properties do not individually exceed the single holding threshold so we have to pay for that, too.

So that is my gripe over for another year - and another factor to keep in mind when we cull the herd.

Cheers
Kristine

 

[jingo]

Land Tax 2013 Assessment

Thought I'd update the thread.

Received our land tax bill today from the State Revenue Office, Victoria. Oh joy, I nearly keeled over. According to my calculations, my bill has increased by 36% this year.

Utterly ridiculous considering property prices in Victoria haven't gone anywhere this year.

Has anyone else experienced such a huge increase in their land tax bill this year?

 

[Dazedmw]

Thought I'd update the thread.

Received our land tax bill today from the State Revenue Office, Victoria. Oh joy, I nearly keeled over. According to my calculations, my bill has increased by 36% this year.

Utterly ridiculous considering property prices in Victoria haven't gone anywhere this year.

Has anyone else experienced such a huge increase in their land tax bill this year?

Your site values must have increased a bit. I don't think the tax rates have changed, have they?

 

[S.T]

I thought land tax was calculated using your rates, aren't rates values updated every 2 years? If so, shouldn't land tax only increase every second year if your property holdings and taxation levels remain the same?

 

[lizzie]

Nearly fainted at my NSW this one - until I realised they included a (now sold) PPOR from 3 years ago in a "recalculation".

Still painful for a tax that was introduced nearly 150 years ago - was supposed to run for one year only - to help pay for some war between England and France.

 

[westminster]

Come buy in WA - 1m property has a land tax of $1600
Pretty rapidly goes up after that 1.5m is $4600, 2m is $7700
No free threshold though - only your PPOR is exempt then you pay land tax on everything else.

 

[CHAOS]

Each separate entity has their own land tax threshold, this includes every individual, company, and trust.

I can't comment on company and trusts but for individuals there is no separate threshold. Individually my husband and I are under the threshold BUT we are paying Land Tax becasue the properties are held 50/50 and by their rules 50/50 equals 100% ownership and you pay.

 

[BayView]

AAAH; it's great isn't it?

God forbid we should all get off our collective @rses, make an attempt to better ourselves and provide for our own retirement and be given some really great incentives to do so by those geniuses in Gubbmint (Greatest Country in the world notwithstanding....shame how that thread ended up.)

I can't comment on company and trusts but for individuals there is no separate threshold. Individually my husband and I are under the threshold BUT we are paying Land Tax because the properties are held 50/50 and by their rules 50/50 equals 100% ownership and you pay.

I can confirm that this is true; we found out the same thing year before last when I rang to query the bill.

 

[Scott No Mates]

Received our land tax bill today from the State Revenue Office, Victoria. Oh joy, I nearly keeled over. According to my calculations, my bill has increased by 36% this year.

Yes the tax take may have increased but how much did the land holding increase? If you were just over the threshold last year and paid very little then any increase would result in a larger increase in tax payable.

 

[Kristine..]

Our Land Tax Down by 50% This Year

We have just returned home from 14 weeks Long Service Leave (Ah! P&O Arcadia, what a great run from Sydney to Southampton! Just bliss!!)

With some trepidation I opened bulging boxes of mail and came upon the State Revenue Office letters – and with great relief our Land Tax is down by about 50% this year

This is because we sold our PPOR and 2 x investment properties late last year and once the PPOR contract became unconditional we moved to this previous investment property. I notified SRO of the sales and change of PPOR, so the 31st December, 2012 assessment was radically different than at New Year’s Eve 2011.

If we had not moved until settlement then the tax would have been a couple of thousand dollars higher, but I provided SRO with copies of the contract of sale and the outgoing PPOR was exempt until settlement which was due at the end of January, and the ‘new’ PPOR was exempt because we were in residence.

The operative date for Land Tax assessment is worth taking into consideration when buying or selling as it can make a noticeable impact on the burden of the tax for that calendar year

However, it was quite a wrench, selling the properties. It felt as if we were putting our children up for adoption! Once the decision to sell was made, we had to step back and let the Agent do his thing – he sold all three to the first people to enquire ie enquiries at the first Opens became written contract s within about three weekends of each sales campaign. Not sales figures to go silly over, but quite respectable results given the condition of the properties and in the current market

Cheers
Kristine

 

[Tillie]

We have not received land tax bill for 2012. However based on our land values on rate notices we should be paying land tax as we did in 2011. When were Victorian bills sent out? Also not sure if I should contact Revenue Office. If they have genuinely forgotten about us, I do not want them to notice, but in other hand I do not want to pay any penalties if Aussie post lost the mail... Any suggestions?

 

[Kaz111]

Burying your head in the sand won't be any consultation when the SRO do catch up with you. From memory, I have paid my 2nd installment for this years bill already.

You can register on the SRO website to view your holding/land tax on line. Why not do this? It lists all properties under the one identity name. You can see what's missing (or added incorrectly). I was tempted not to advise them of 2x that they had missed from my list, but the penalties for not coming clean were not worth it in my opinion.

I would take action.