Received land tax bill for NSW - $4K for 2 years!

[babushka]

After 15 months, the OSR in NSW finally sent us the land tax bill for our IP in the Maitland area, and I almost had a heart attack - nearly $4K for 2005 and 2006!

The IP is in a HDT so there is no threshhold. The rate is 1.7c for every $1 (increased from 1.4c for every $1). The land value is $117K. They also charged us interest for late lodgment, but I phoned and told them not so - we registered in November 2004, but they never sent us anything. I followed up with phone calls and emails and they kept saying "don't worry, we will get to you". They said the system imposed interest penalty automatically when a notice of assessment is for more than one year. But, they will take it off! Now, they billed us for 2 years and gave us 3 months to pay - in equal instalments.

This is why we won't be buying another IP in NSW - the land tax is eating up our rental income.

 

[Jacque]

I got similar ones myself today so I know how you feel! It's getting ridiculous, isn't it?
Here we are, trying to invest for our future to remain independent, and we're slugged with enormous ongoing annual bills which are based on an archaic system of land ownership.

 

[bobby]

Land Tax

After 15 months, the OSR in NSW finally sent us the land tax bill for our IP in the Maitland area, and I almost had a heart attack - nearly $4K for 2005 and 2006!

This is why we won't be buying another IP in NSW - the land tax is eating up our rental income.

Are HDT's treated the same in other states????

Bobby

 

[NedKelly]

What's an HDT?

 

[bobby]

Hi Ned,

Hybrid Discretionary Trust...

Bobby

 

[perky29]

Are HDT's treated the same in other states????

Bobby

Nope, take this for example - http://www.somersoft.com/forums/showthread.php?t=20993&highlight=trust+land+tax

Land tax threshold of 300k in QLD - per trust. So do as some others here have done, and set up multiple trusts (and pay little or no land tax).

 

[Gee Cee]

What a Govt

The state goverment and local Councils are continually trying to drum up business and jobs in areas. Yet they slog you with Huge Rates, Development Fees, Pay Roll Taxes, and Land Tax, Etc. Etc.

It is like at the end of the day after making a bit of a profit everyone in the state has a bite. Leaving little . Then the Govt hits you for GST & Capital Gain.

Sometimes it is just better to lay on the beach.

Wonder if I could claim unemployed, insane, rental assistance and free medical

 

[handyandy]

The situation is getting rediculous.

For a townhouse we own, the expenses are as follows

LAND TAX $2K
council rates $1200 (as an investor you don't get a vote)
Strata fees $2k (due to this sinking fund hike - a state gov initiative)
sewerage $500

Total charges which I can't in anyway affect $5700

Rent for this property currently $240pw, $12480 per year, leaving me with $6780 to pay the interest and all the other expenses.

Basically the state government makes more on this property than I do.

(Get on soap box - a council approved soap box off course)

On top of these type of expenses the state gov/local council are now forceing a spend of at least $1000 per unit to upgrade fire protection in buildings that were approved for occupancy 25-30 years ago.

These expenses are for individual hardwired smoke alarms per unit. Upgrade of fire doors after tenants have hacked them to pieces over the last 30 years. Emergency lighting and smoke alarms in all staircases which will no doubt get vandalised in next to no time and become another maintenance issue.

Possible upgrade of top floor ceilings because the council originally approved the building with only one layer of gyprock rather than the current requirement of 2 layers.

Next, it will be sprinkler systems because even though smoke alarms are present somebody unfortunately still dies in a fire because they felt unsafe in the unit they own. So, instead of fitting a more secure lock, that is now illegal under the fire regs, they piled a whole heap of garbage behind the door so nobody could enter.

Where does it stop.

We seem to own property just so the government can come along and extort more and more money from the rich landowner for the priveledge.

Maybe one solution is that council rates are paid by the tenant as they get their garbage removed, they use the local roads, they make use of the library, the pool, and basically all other facilities that are paid for by the rates. (sounds like a poll tax). A similar arguement can be put forward for the land tax which again is used to pay for more facilities the tenant enjoys. Ah, but of course they don't own anything so they are a rather elusive target as against the home owner/investor.

Get off my soap box (its starting to bend alarmingly and I just noticed it's not fitted with a smoke alarm)

Cheers

 

[Jacque]

Handy my mate
You start the petition and I'll be the first to sign!

 

[babushka]

What can we do about this dreaded land tax thing in NSW for family trusts? Can we form a lobby group, write a petition or something to get the NSW government to allow a threshold, as is the case in QLD and in Vic (I think - although changes are mooted in Vic on this)?

 

[Jacque]

There are some awfully sad stories out there about land tax. Here's one:

Maria and her husband bought 5 acres of land back in 1983 in Box Hill, a far flung area of outback Sydney (at the time). The intention was to keep it for their retirment, where they would move from their current Seven Hills home onto some land and build something nice. They borrowed the money, paid it off over several years (and went without lots of nice things to do so) and then, unfortunately, the husband died.
Maria kept the land as, even without an income being derived from it, there was now no mortgage. A neighbour kept horses on it, and for this, agreed to keep the fences maintained and the weeds controlled.
The first land tax bill Maria got (two yrs ago) was $2,500. She was unprepared, but managed to pay it, as she still works two days a week and had some savings. This year, however, with the escalating land valuations, her bill is a whopping $12,000. To say she is shocked is an understatement. Her bank balance won't cover it, and it looks as though her family are going to have to take out some type of overdraft to help her out. The same thing will happen next yr, and the yr after and the yr after that.
All this for a piece of land that she went without with to obtain, has fully paid off and has quietly looked forward to sharing with her children in her twilight years.

I ask you: Is this fair? The State govt has much to answer for, when they are taxing asset rich (but cash poor) land owners to the hilt and then some, for the very privilege of buying land in our fair state.
There has to be a better way.

 

[ram_vemula]

Land Tax in Vic

Hi All,
Does anybody know what the story is in Vic pertaining to Land Tax on trusts? Thanks.

Ram.

 

[austini]

Hi All,
Does anybody know what the story is in Vic pertaining to Land Tax on trusts? Thanks.

Ram.

Hi,

Those who already own property in a trust in Vic were lucky as the new Trust surcharge won't apply. Unfortunately any new acquisitions by most trusts will be slugged with the surcharge. The whole unfair land tax issue is a real disincentive for holding property in a trust. No problem with shares however which seem to work nicely in a trust.

Regards - Gordon

 

[babushka]

Hi Gordon

What do you mean by trusts already owning properties and new acquisitions? When is the cut-off date? We bought a property in Vic for trust, settled in early October 2005. Does this mean our trust will have to pay the surcharge, or? Oh, the dreaded land tax!!!

 

[austini]

Hi Babushka,

The cutoff date is 31 Dec 2005 so you looked to have just scraped in. However in your case you must complete the required form to nominate a beneficiary prior to 31 March to avoid being slugged with the surcharge. Go to the OSR Vic site as all this stuff is explained:

http://www.sro.vic.gov.au/SRO/srowe...Special Trust.htm?OpenPage&charset=iso-8859-1

http://www.sro.vic.gov.au/SRO/srowebsite.nsf/ByDominoFilename/attachments_LandTaxTrusts_MediaRelease30Jan06.doc/$FILE/MediaRelease30Jan06.doc

http://www.sro.vic.gov.au/sro/srowebsite.nsf/revenue/8E1F6072999F5505CA2570EE00078903/$File/LTX-Trust-7.pdf

By new acquisitions I mean all property purchased through most trusts after 31 Dec 2005. These will be slugged with the surcharge.

Please check these details though as I'm going off memory which is not that good nowadays.

Regards - Gordon

 

[simonjulie]

Got our NSW land tax bill today over $20K
Bugger
Simon

 

[babushka]

1. Hi Gordon: Thanks heaps for the info on the Vic land tax. Phew! - like you said, we have just scrapped in. We will check out the links and complete the form etc as you have suggested.

2. Oh, Simon: Sorry to hear about your NSW land tax bill - bugger, indeed!!! We only have one property in NSW and it is in the regional area and the land tax bill is large enough to eat into our rental income. No more properties in NSW for trust.

 

[markp]

Thankyou for the warning guys.

I will be sitting down with a stiff drink before I open the envelope but if I have a heart attack and die on the spot I have instructed my wife to lay murder charges against the politicians responsible.

 

[Jacque]

Land tax is proving to be the final straw with us old camels......
And, unless the threshold is increased and the whole land tax system reviewed, I can see some investors selling out as soon as practicable in this market. The holding costs are just getting out of hand.

 

[ram_vemula]

Thanks for that info Gordon, we were just about to transfer our PPOR into a HD Trust, but now have to think really hard before taking that step! Thanks all.

Ram.