October 21, 2017

How Is Land Tax Calculated in NSW?

One of the terms that homeowners and real estate agents in New South Wales encounter is land tax. It is the tax that is levied on landowners in the state every December 31 at 12 midnight. This applies whether the landowners earn money from their land or not.

How to Calculate Land Tax in NSW

It is calculated based on the total value of all of your taxable land that is over the threshold of $549,000. A tax amount of $100 is paid and 1.6% of the value of the land, between the land tax threshold and the premium rate threshold which is $3,357,000. It becomes 2% for the succeeding land value.

Keep in mind that if the land is owned in partnership, the land tax threshold will still be $549,000. Also, there may be assessments on a person’s interest in a partnership if he/she is an owner of other land properties, whether as an individual or with partners.

To have an idea of how much land tax you need to pay, you can use a land tax calculator. You’ll find numerous websites that enable you to calculate land tax based on all the land properties that you own. But as with any other tax-related matters, it is still best to seek professional land tax advice. An expert will help you better understand the land tax that you need to pay as well as whether or not your land is taxable.

Landowners

Who can be considered a land owner? Land ownership comes in many forms. It can be a sole owner, joint owners, a company or owners of title units, trustees of super funds, trust beneficiary, a society or organisation wherein the land is not exempt, unit holders whose interest in a unit trust is entitled to the threshold of land tax, and lessees of a local council land.

Are you a landowner in New South Wales? Your land may be taxable if it falls under any of these classifications:

  • vacant land
  • holiday or vacation home
  • land where a residential unit has been constructed
  • company title units
  • investment property
  • residential
  • commercial or industrial units
  • commercial properties
  • land which is leased from the state or local government

Make sure to check your local taxation website to know more about land tax in your area.

Got other ideas about land tax in Australia? Share your insights in the comments section.

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What do You Need to Know about Land Tax in New South Wales?

If you’re a homeowner or a real estate agent in New South Wales, you have most likely come across the terms land tax and land calculator. Land tax refers to the tax levied on land owners in New South Wales on the midnight of December 31 every year. Whether income is earned from the land or not, land tax is applicable.

Here are some of the things that you need to know about land tax:

  • When it comes to land tax, an owner refers to any of the following: sole owner, joint owners, a company or owners of company title units, trustees of superannuation funds, trust beneficiary, society or organisation where the land is not exempt, unit holders whose interest in a unit trust is entitled to the land tax threshold, and lessees of crown or local council land.
  • If you are considered an owner of land, you may have to pay land tax if the property falls under any of these classifications: vacant land, holiday or vacation home, land where a residential unit has been constructed, company title units, investment property, residential, commercial or industrial units, commercial properties or land which is leased from the state or local government.
  • How is land tax computed? It is calculated based on the combined value of all the land that entails land tax above the threshold. The rate of tax is $100. Add to this is 1.6 per cent of the land value between the threshold as well as that of the premium rate, and two per cent thereafter. Bear in mind that you will not pay land tax if the total value of your land does not go over the land tax threshold. Keep these in mind so you can better prepare should you need to pay land tax.
  • A land tax calculator can be used so you can have an idea on how much land tax should be paid based on all the land that you own and if it entails land tax. There are so many websites that offer land tax calculators, but it is still best to seek help from a professional to have a better understanding of the particulars of land tax in Australia. Getting feedback from friends who have experience in paying land tax will also help.

Do you know other things that should be considered when it comes to land tax? Share your ideas in the comments section.

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Land Tax Proposals from The Henry Review – A Quick Summary

If you have property, you have heard the term “land tax”. And you are obviously aware that there are several factors that come into play when it comes to calculating it. But have you heard of land tax proposals from The Henry Review? It is Australia’s Future Tax System Review that aims to guide tax system reforms for the next 10 to 20 years. Commissioned by the Rudd Government in 2008 and published two years later,

In this article, know more about land tax proposals included in The Henry Review. This report covers 138 recommendations which are classified under nine themes:

  1. Concentrate raising revenues on personal income, business income, private consumption, as well as economic rent from natural resources and land.
  2. Configure taxes and transfers for productivity, participation, and growth.
  3. Implement a simplified personal income tax. A tax-free threshold reaching AUD 25,000, two tax brackets, as well as simplified superannuation, deductions, and offsets.
  4. Establish a fair, adequate, and work supportive transfer system.
  5. Integrate consumption tax compliance with business systems.
  6. Establish efficient resource and land taxation.
  7. Complete the retirement income reform and secure aged care.
  8. Increase rent assistance, move to a uniform land tax, delete stamp duty, and move to a neutral treatment of rental and owner-occupied housing.
  9. Establish a more open, understandable, and responsive tax system.

One important proposal that we can focus on is the removal of stamp duty. Since it is an unreliable revenue source, The Henry Review urges states to replace it with land tax on every property. However, the thing about having universal land tax is that it doesn’t take into account an individual’s capability to pay. Also, it greatly affects those who have a lot of assets but with little cash. These include many retirees. The land tax can be a great financial burden, not to mention the interest charged by the ACT on land tax arrears.

Once you know more about land tax proposals in Australia, you’ll find out that solutions won’t come easy. It will entail a lot of research and agreement among states to ensure that solutions that will be made will be beneficial for most people. As an individual, it pays to have a better understanding not only of land tax but other aspects of property ownership.

Do you have other ideas when it comes to land tax in Australia? Share your insights in the comments section.

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What is a Land Tax Calculator?

There are so many things to consider when purchasing a property. One of these is the land tax in Australia. Every year, a property owner pays land tax which is computed based on the unimproved value of land other than the property where he/she lives.

How do you compute the land tax?

Each state is responsible for collecting land tax. Bear in mind that land tax rates vary depending on the state which has its own set of rules and regulations. Since each state has its own legislation, there are also different rates, thresholds, and ways to compute land tax. The taxable value is computed using the relevant land tax rate and the total taxable value of the land or properties that you own by midnight of June 30.

Another good way to determine the amount of land tax that you need to pay is to use a land tax calculator. This online tool enables you to calculate land tax, considering the different rates applicable on different types of owners or entities. While a land tax calculator is a helpful tool, keep in mind that the figures that you can get from it are only estimates and therefore should not be used to determine the exact amount of land tax that you need to pay to get a land tax certificate.

Who needs to pay land tax in Australia?

A property owner who can be sole or joint owners, a company, an owner of company title units, a trustee of a trust or superannuation fund, or a lessee of local council land.

What are the types of property that you may need to pay land tax for?

As a property owner, you may be required to pay land tax on a vacant land, a vacation home, an investment property, a commercial property, a residential/commercial/industrial unit, and a company title unit. Your main place of residence is exempt from land tax.

Where can you get information about land tax?

Here is a list of websites where you can get information about land tax based on your state:

Use a land tax calculator to get an idea of how much land tax you need to pay. It is also a good idea to seek help from a tax advisor so you will better understand what taxes are involved in your properties. By the time you receive your first land tax bill, you will be prepared.

Is there something about land tax in Australia that we’ve missed? Share your ideas in the comment section.

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Airbnb and the Land Tax Risk in Australia

Airbnb makes earning a side income easy. But it might expose you to a range of tax risks.

The sharing economy is a handy way to make money on the side of a regular income with assets you already have and at times which work for you. Take Airbnb for example; if you already have a house then it isn’t hard to rent a room on the weekends, or for two weeks during holiday periods when your away.

But, you might be opening yourself up to large tax liabilities. Why is this? Because rental properties and primary homes are treated differently for tax purposes. Here are some of the taxes you need to think about if you are an Airbnb host.

Land Tax

All states and territories charge some form of land tax. The obligations and liabilities are different in each state. Broadly speaking, land tax is charged on rented property and paid by the owner.

A primary residence – your family home for instance – is usually exempt from land tax. However, things can get murky if you start renting through Airbnb. If you are renting part of your home, the state revenue office may class it as a rental, and charge you land tax.

Income Tax

Any income you make from renting your property on Airbnb should be declared. The tax office can easily find out that you are making it, regardless of how you receive payment. Make sure you keep aside enough from each payment to cover your tax liability at the end of the year. The upside is you should be able to claim deductions against this income.

Capital gains tax

Like land tax, you are not required to pay capital gains tax on your primary residence. It is charged, however, on investments, such as a rented property. If liable, capital gains tax is imposed on the difference between your purchase price and the sale price. It has the potential to be a significant amount of money.

The federal and state governments are increasingly using ‘robots’ to find income and check people’s tax liabilities. So, there is no point trying hide the fact that you’re renting, if anything, you will just get hit will a fine once they do find you.

Before going ahead and renting part of your primary home on Airbnb, consider the tax implications. Talk with your accountant to get clarity on how your home will be treated should you start making an income in Australia, even if only part time.

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Land Tax in Queensland

In Queensland, land tax is state tax imposed on the land value. Under the Land Tax Act 2010, the Queensland Government imposes it on owners of freehold land every June 30. It is assessed based on the taxable value of the total land-holdings of the owner and any exemptions applicable.

Here are some of the things you need to know about land tax in Australia:

What types of land are liable for land tax

These include vacant land, land which is built on, as well as lots in building unit plans, group title plans, timeshare scheme, and which is owned by a home unit company.

There are different types of owner for land tax

In general, the owner refers to the individual or corporation which is registered as the owner with the Department of Natural Resources and Mines. An owner can also be someone with legal entitlement to the land, who is entitled to income from the land or is taken to be the owner. This is the case for undisclosed trusts, deceased states, etc.

Use a land tax calculator

This can give you an idea of the amount of land tax that you need to pay at general rates. There are many types of land tax calculators but in general, you need to state the year you’re calculating the land tax for, land value, as well as the state so you can calculate the estimated land tax.

Know how to minimise land tax

While there are ways to reduce land tax payments in Queensland, make sure to assess your current situation first and see if these tips suit you:

  • Buy property in different states. Each state has a land tax threshold. In the Northern Territory, there is no land tax at all. So instead of investing in property in one area which can lead to exceeding the threshold, consider doing it in different states.
  • Buy apartments/units instead of houses or freehold properties. Compared to a house, a unit has lower land content because of the shared strata with other apartment owners.
  • Buy in property in different entities. Buy properties using entities such as family members, companies, as well as trusts. Land tax thresholds are generally higher for individuals, so you may want to invest in property in individual names.

Certain changes can affect land tax

Some of the events that can affect the liability of an owner for land tax include buying or selling land, change of residential status, revaluation, not being able to meet exemption requirements, and changes that have an impact on trustees, corporations, as well as deceased states.

Do you know other things to consider when it comes to land tax in Australia? You can share your ideas in the comments section below.

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