Victoria - Land Tax Increase?

From: David H

I saw an article in Friday's Australian saying that from 1 July the Bracks government was going to increase land tax rates as well as reducing/eliminating thresholds. Figures like $200 land tax in previous years may now be around $5k (if my memory serves me correctly).

If this occurs then I am very concerned that there are going to be a lot of very unhappy IP investors out there.

Does anyone have any further information?
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Reply: 1
From: Michael G

One option and it may not be the best one is setting up multiple entities to hold assets, with each entity holding enough assets to remain below the thresholds.

Entities like trusts/companies etc.

Though this won't help those neg-gearing the depreciation.

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Reply: 1.1
From: Manny B

Howdy there,

where can i get more information on these Victorian Land Tax increases? and the thresholds that do exist? Any help would be greatly appreciated...

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Reply: 1.1.1
From: Terry Avery

As far as I know, from reading media reports, a committee recommended
changes to the stamp duty regime in Victoria to be funded by restructuring
land tax. So they would take away one tax and increase the other, after all
it is OK politically to increase an existing tax but not to introduce a new
one (look at the trouble the government is in over GST!). Even better to get
rid of a tax, that is always popular. So the PROPOSAL is to reduce or
eliminate stamp duty but increase land tax. It is only a proposal which the
Bracks government is considering. They have not implemented it yet even
though the proposed implementation date is 1 July.

Another case of legislation by media release!!!
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From: Michael G


The other thing to consider is that stamp duty is a one-off payment while land tax is an annual duty.

So the Government drops an income which is unpredictable in favor of one which is easier to budget for.

Someone's been thinking!

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From: Jenny F

All, well there could be one minor "benefit" to the change - as land tax is tax deductible against rental income each financial year whereas Stamp duty is only deductible to offset any future capital gain. But of course you still have to pay it each year for the privilege of the tax deduction!

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From: Robert Forward

But this is where you need to be creative and minimize the amount of property you own in a single name/entity/company/trust....

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From: Terry Avery

Yes it is true that the land tax is tax deductible which softens the impact
just a little but it is still an extra cost of doing business and thus
lowers profitability for landlords.
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