Oh goody, mine shall be arriving in the near future also.
Kristine, I feel for you and all those who have multiple holdings in the one state and one entity (be it personal holding or strucutred in trust or Co, etc).
Jingo could probably write this post for me as he know's how much this impost fires me up. I have posted on numerous times about this and don't have time to go hunting for those posts right now, however aside from being the cost of doing business and that we should strucutre ourselves by way of entity (beware states with no entity threshold), divesting interstate has been the best thing I have done.
Further to this, get into boxes where the tenant pays this impost or at least helps fund it on a single holding basis.....thinking commercial (not retail) such as offices or industrial.
Last year I harvested one resi IP that had a land tax bill that was over 20 % of the rent. An ownership assignment error by Vic SRO also saw one other property have a land tax bill over 30 % of it's rent. Took them over 6 months to rectify. Meanwhile I paid so I would not be in default/arrears and they eventually corrected their error and reimbursed me the difference. Our SMSF has three holdings in Vic and also pays a not insignificant amount.
Why are we charged land tax? Because the state revenue offices can. It adds to their pool of funds to mismanage on the state's behalf.
In and of itself, it offers nothing but a money grab. If it were allocated on a single holding basis it would be more palatable. However, the more the merrier. The more proactive the greedy investor is to fend for themselves and their retirement and provide rental accommodation to tenants, the more exponential the punishment administered shall be. Bracket creep and jumping two tiers all in one year can be very overwhelming.
Also, as Bigtone mentioned, don't think blocks of units are more minimisationalist in thier attraction of this impost. Depends where they are and what the dirt is worth. And if they are strata'd and you own the lot.....watch out. The little bits of dirt added together are worth much more that the whole was before it was split to enable the sum of its parts.
Historically, it was a land tax to prevent land barons hoarding developable tracts of land in and around expanding metropolitan areas. Then it was kept and it was used to supposedly fund all sorts of war and post war repatraition efforts and so on the justifications go. Now it exists because like any paradigm , everyone is conditioned to pay it and so the state levies it to the investor or business owner who also owns freehold and the coffers are wide open and receptive to the cash grab.
This post wasn't meant to be as long as this.......but this is the bane of my investing journey. Much of my mail is still being re-directed, so I can hardly contain myself when I see those SRO window envelopes arrive in the next few days.
Spread the love around folks. A little bit here, a little bit there with interstate purchases and also some variety in entity holdings may help hedge the exponential pain of this impost. Like all things we cannot change............. Learn the rules and play by the rules to minimise these sorts of outgoings and levies. Benefit of interstate aside from land tax divesting is the exposure to different markets in different cycles. If I had my time again and know what I know now, I would have started the interstate strategy a lot sooner
Have a nice day everyone