{"id":20830,"date":"2018-04-09T01:00:13","date_gmt":"2018-04-08T15:00:13","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=20830"},"modified":"2018-04-09T01:00:13","modified_gmt":"2018-04-08T15:00:13","slug":"land-tax-and-the-facts-ian-rodrigues","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/land-tax-and-the-facts-ian-rodrigues\/","title":{"rendered":"Land Tax and the facts \u2013 Ian Rodrigues"},"content":{"rendered":"

We set out to clear the confusion around land tax with the expert help of Ian Rodrigues<\/strong> but quickly find we can\u2019t do it in 5 to 7 minutes.\u00a0 We do have a solution though.\u00a0\u00a0 You hear about it in the show as we answer the question we received from Cathy.
\nTranscript:<\/strong>
\nKevin:\u00a0\u00a0<\/strong>We\u2019re going to answer a question that came in from Cathy. It\u2019s a very complex question; we\u2019ll unpack it as best we can. To help us with that, Ian Rodrigues joins me from Bishop Collins.
\nIan, this is to do with land tax, and we\u2019ll talk about how we\u2019re going to talk about this after I detail the question. Firstly, hello and welcome to the show, Ian.
\nIan:\u00a0\u00a0<\/strong>Always good to be here, Kevin.
\nKevin:\u00a0\u00a0<\/strong>This is the first time we spoke in 2018, so it\u2019s nice to have you back in the show, and I appreciate your excellent input into this.
\nThe question from Cathy is \u201cIs it true regarding no land tax payable if three parties own a property in different name combinations?\u201d It goes into a lot more detail, which we\u2019ll probably talk about as we get into it, but let\u2019s talk about land tax.
\nWhere do most people get confused, Ian?
\nIan:\u00a0\u00a0<\/strong>I think land tax is one of those ones that people get completely confused on every part of it. To cover off for listeners to understand how it works is a bit of a process you need to go through. But the fundamental point people need to understand is land tax is a state tax. So, it\u2019s not like income tax, capital gains tax, or GST; it is applied by each state.
\nAnd of course, every state does it quite differently. They all have different rates and thresholds and exemptions and all those things. But at least it\u2019s pretty clear in which state your property lies, I would think.
\nKevin:\u00a0\u00a0<\/strong>On your website, would you accommodate for this as well if we wanted to know state by state. If I had a question about land tax in a particular state, if I went to your website, is there some help there for me?
\nIan:\u00a0\u00a0<\/strong>Probably not, but the best website to go to is the relevant Office of State Revenue in the state. They all have excellent websites, and they have excellent fact sheets and examples. And if you\u2019re that way inclined, you can certainly read through and get an understanding of how it works, which I recommend for all property owners, rather than just handing it to your accountant or advisor and let them work it out, because there are opportunities to minimize land tax by owning properties in different states.
\nSo, the first point was the fact that it is state-based. All the rates, taxes, thresholds and exemptions are very different. Of course, people need to understand you don\u2019t pay land tax generally on your principal place of residence. And the definition of that is very closely aligned to the capital gains tax exemption as well. So, that\u2019s the good news.
\nKevin:\u00a0\u00a0<\/strong>The bad news?
\nIan:\u00a0\u00a0<\/strong>The bad news is that there are a lot of exemptions that apply to farming land and things like that, but for most investment property, land tax applies.
\nThe next point people stumble across is the fact that land tax applies to the land value, not the market value of the property.
\nIn New South Wales at the moment, the threshold \u2013 if I can read the website correctly \u2013 is $629,000 of land value. If you have a property worth $629,000 that has a building on it, it is highly unlikely you\u2019re over the threshold. So, people need to understand that it\u2019s on the unimproved land value, which is assessed by the Valuer General, generally every three years. But you get that on a notice.
\nMy tip for most of your listeners is if you own property that may be subject to land tax one day, register for land tax. You may get a zero assessment every year because you\u2019re under the threshold, but when you finally do go over the threshold, you\u2019ll automatically get your notice of assessment and be told what you owe.
\nThe trap for people is that they forget about it, they\u2019re unaware of it, and when you go to sell the property\u2026 This is what I guess the government loves about land tax: you cannot escape this. Because if you go to sell a property, you have to get a thing called a land tax clearance certificate saying that the land tax has been paid. So, if you haven\u2019t paid it for ten years, you\u2019re going to be paying it.
\nKevin:\u00a0\u00a0<\/strong>What about a couple who own a couple of properties pre-marriage, then they get married? How is the land tax calculated in a situation like that?
\nIan:\u00a0\u00a0<\/strong>The simple act of being married doesn\u2019t change. If mom owned a property and dad owned a property, if they\u2019re both under the threshold, they\u2019re still both under the threshold.
\nThis is where it is very confusing, so I\u2019ll try my best here. Land tax is assessed on properties that you own jointly as a group. So, if mom and dad owned an investment property together, they\u2019re assessed on the one threshold together.
\nEvery property that you own jointly with other people is assessed jointly, and then you\u2019re also assessed individually. So, if you own another investment property in a 50% share with mom, you\u2019re assessed on your 100% property land value and the 50% land value on the other one, which are added together to see if you\u2019re over the threshold.
\nI think that explains it well, but it just confuses a lot of people, and your questioner here has all sorts of issues.
\nKevin:\u00a0\u00a0<\/strong>Cathy, it\u2019s very hard for us to answer this so succinctly. What we are going to do \u2013 I\u2019ve spoken to Ian about this off air \u2013 we\u2019re going to put together a special program that will dig into this. I think it\u2019s about six parts we\u2019d need to put it into, Ian. I\u2019ll record that with Ian. That\u2019ll explain this in great detail and answer all your questions. So, watch out for that. I\u2019ll record it with Ian, then we\u2019ll let you know how it\u2019s available. And to subscribers to our show, you\u2019ll get that as a free download.
\nIan, thank you for helping this question with Cathy and also for the offer to do that special program. I think it\u2019s going to be very valuable for all of us.
\nIan:\u00a0\u00a0<\/strong>Yes. I have found over many years that land tax is probably one of the most misunderstood and confused taxes. When people understand it\u2026 I hate to say this and I know I haven\u2019t met too many people who like paying land tax, I don\u2019t know many people who like paying tax full stop, but land tax seems to cause the most \u2013 I don\u2019t know \u2013 pain factor.
\nKevin:\u00a0\u00a0<\/strong>Anger.
\nIan:\u00a0\u00a0<\/strong>Yes. And it\u2019s a very direct tax. You have to write a check for it. A lot of other taxes \u2013 GST and income tax \u2013 are taken out before you see it. So, it\u2019s very visible, but when people understand how it works, it\u2019s actually one of the most equitable and efficient taxes we should have.
\nBut your listeners are going to have to hang with me to understand why I say that, otherwise I\u2019ll just get hate mail now.
\nKevin:\u00a0\u00a0<\/strong>We\u2019ll put it all together for you. Watch out for it. We\u2019ll let you know through the shows how you can actually get that free download.
\nIan Rodrigues from Bishop Collins has been my guest. And Cathy, good news for you, because you\u2019ve given us such a difficult question \u2013 and we\u2019ve answered it the best way we could \u2013 we\u2019re going to give you a 12-month subscription to\u00a0Your Investment Property<\/em>\u00a0magazine for your efforts and for your question. So, thank you for that. I\u2019ll be in touch tell you how you can get a hold of it.
\nIan, thank you very much for your time.
\nIan:\u00a0\u00a0<\/strong>My pleasure, Kevin. Talk soon.<\/p>\n","protected":false},"excerpt":{"rendered":"

We set out to clear the confusion around land tax with the expert help of Ian Rodrigues but quickly find we can\u2019t do it in 5 to 7 minutes.\u00a0 We do have a solution though.\u00a0\u00a0 You hear about it in the show as we answer…<\/p>\n","protected":false},"author":176692471,"featured_media":20831,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,10,11,13,36,22,25],"tags":[101],"class_list":["post-20830","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nLand Tax and the facts \u2013 Ian Rodrigues - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/land-tax-and-the-facts-ian-rodrigues\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Land Tax and the facts \u2013 Ian Rodrigues - 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