One of the terms that homeowners and real estate agents in New South Wales...Read More →
When purchasing a property, it is wise to understand the types of taxes that you might have to pay one you own that property. This will assist in the decision making process when you buy. Land tax is one of the large taxes that owners of properties are charged, and it’s a tax that can easily be missed until you buy the property and get your first notice.
One common source of confusion arises from the fact that land tax is not charged at a federal level. Each individual state in Australia has its own set of laws when it comes to the collection of land tax.
In order to make things easier, we have covered the basics of land tax in Australia and the rules and thresholds in different states. We have also included some information about land tax calculators and some tips for investors.
Those wanting to find out more about land tax in Australia, should read further…
Land tax is an annual tax payable by owners of land, and it is managed by each state. Land tax is calculated on the unimproved value of the land, and is usually charged on properties you own other than your principal place of residence.
The owner of the property, as at the predetermined date in the specific state, is liable to pay the land tax assessed for the forthcoming financial year.
Australian land tax rates vary from state to state. The tax itself is administered by the particular state or territory government and is applicable everywhere in Australia, except for the Northern Territory. In the Northern Territory there is no land tax.
The amount of land tax paid is usually determined by the combined unimproved value of the taxable property. It is important to note that this applies to the land only and not to any properties on the land.
The permanent place of residence i.e. the house you live in is exempt from land tax. Therefore, owners are expected to pay tax on properties such as investment properties and holiday houses etc
You will face penalties for failing to pay land tax.
Depending on your state, there are plans available for those who struggle to pay their annual land tax bill, so it’s a good idea to investigate this if you fall into this cateogry for whatever reason.
Property owners and investors across Australia are expected to pay land tax. Generally, this tax applies to all investment properties, both residential and commercial. It excludes your principal place of residence.
Land tax in Australia is generally paid by everybody who owns property, regardless of ownership structure. It is important to understand the impact the ownership structure prior to purchasing a property. A good tax advisor can provide land tax advice so there are no surprises when you receive your first land tax bill.
Each state manages the collection of land tax on properties located that state. From state to state there is different legislation governing the collection of land tax, and therefore different calculations, rates and thresholds etc.
Because land tax is managed on a state to state basis, the relevant department responsible for the management and collection is as follows:
In ACT, the ACT Revenue Office is responsible for managing land tax.
In NSW, the NSW Office of State Revenue (OSR) is responsible for managing land tax.
In QLD, the Queensland Office of State Revenue (OSR) is responsible for managing land tax.
In SA, Revenue SA is responsible for managing land tax.
In Tasmania, the State Revenue Office is responsible for managing land tax.
In Victoria, the State Revenue Office is responsible for managing land tax.
In WA, the Department if Finance is responsible for managing land tax.
No land tax payable.
Each individual Australian state or territory government not only has its own tax rate but also certain exceptions within their laws. Therefore, when buying interstate, it’s important that the tax laws for that state are understood well. This it’s why it’s always good to get independent tax advice.
Apart from the rates, each of these states and territories also has different assignment dates:
Land tax is generally payable on land value and not property value above the Land tax threshold. Each and every state has its own tax threshold. Usually, everything below that threshold means that you don’t pay tax on it.
Here are the thresholds in different states:
While all of the above-mentioned states have a certain threshold, ACT has some different rules. In 2016-17 land tax includes a fixed charge of $1,090 plus marginal rates that are applied to the property AUV.
The value of the land is a major factor that influences how much land tax will be. Depending on the state and its threshold and tax rates, land taxes can vary.
The value of the land itself is generally determined by the State Valuation Office. The value is determined using industry recognised valuation processes that takes into consideration the sales and related market evidence as factors that can have a certain impact on the value of the particular property.
Owners who are not satisfied by the assessment may object. Each state has it’s own process which can be followed.
Generally, Australians are not expected to pay land tax on their home or permanent residence. Land tax generally only applies to:
Owners of investment properties usually will be liable for land tax, so it is important to understand the land tax requirements for the relevant state you are investing in.
Some ways that investors have been known to save on land tax includes:
It is always important to know exactly how much tax you will be expected to pay before investing in a property. The last thing you want is to surprised by an expensive land tax bill that you weren’t expecting. That is why using one of the land tax calculators available online can be a good idea while you are doing your research.
Land tax calculators are usually simple to use and hey are designed to be helpful both to experienced investors and those starting out on their investment journey.
Land tax calculators, though, provide an estimate only! When you are considering investments and relevant taxes, it’s important to discuss with a trained professional who can give you advice with more accuracy.
Land tax can be tricky, especially in Australia and especially for investors trying to make some returns! But like anything a lot of research before you part with your money, can save you a lot of money in the long run.
If you’re a homeowner or a real estate agent in New South Wales, you...Read More →
If you have property, you have heard the term “land tax”. And you are...Read More →