Posted Thursday, 19 January 2017 at 23:54 by Shape Home Loans
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Most NSW investors will obtain their land tax bill around January - March each year, so this article explains the basics of NSW land tax.
Land tax is a tax levied on the owners of land in New South Wales (NSW) as at midnight on the 31 December of each year irrespective ( does not take in consideration) of your taxable income. Land tax applies to investment properties only, so your owners occupier property is exempt. This is a state tax and is charged by Office of State Revenue.
You will only get a land tax bill if you're over the threshold, see below.
Land tax is calculated on the value of the land only ( not the value of the property), your owners occupier property is exempt, also everyone is entitled to a $549,000 (2017) tax free threshold per person.
|Tax year||Threshold||Tax Rate|
$100 plus 1.6% for any amount
above the $549,000 threshold
$45,028 for the first $3,357,000
and then 2% over that.
This is hard to tell, as this is land value only excluding the building/location value. Many factors effects the land value such as; location, number of units in the complex, size of your property, land size, proximity to infrastructure and zoning.
The office of state revenue will average the last 3 years land value.
As an example, below gives you a rough idea of the possible land value.
|Location||Property||Market Value||Rough land value|
1 bedroom unit
50 sq meters
Building has >60 units
|2150 - Parramatta||2 bedroom unit
90 sq meters
Building has >60 units
2 bedroom townhouse
270 sq meters land
>15 units in the complex
|2121 - Epping||
4 bedroom house
700 sq meters land
|2145 - Wentworthville||
3 bedroom house
550 sq meters land
Mr and Mrs Smith owns 5 investment proeprty with 50% ownership each and one owners occuiper proeprty.
Property A: 1 x bedroom unit in Sydney CBD - land value $190,000
Property B: 2 x bedroom unit in Hurstville - land value $260,000
Property C: 3 x bedroom house in Campbelltown - land value $320,000
Property D: 4 x bedroom house in Stanmore - Land value $850,000 ( OWNERS OCCUIPER)
Property E: 3 x bedroom house in Blacktown - Land value $380,000
Property F: 4 x bedroom house in Blacktown - Land value $400,000
Note: Land tax is charged regardless of the person's taxable income. The land tax is proportioned based on the percentage of ownership.
Total land value (excluding owners occupier property) = 1,550,000
land tax bill per person = 775,000 ( 1,550,000/2)
Minus the 549,000 per person threshold = 226,000
So = $100 + ( 226,000 @1.6%) = $3,716 PER year in land tax. Per person.
Yes. Click here to learn about negative gearing and what is tax deducitable.
Yes, in fact depending on your company or trust setup/type; you may not be entitled to any threshold. So this means you may need to pay full land tax from day 1.
No. Each state has their own rule and calculations.
Yes, please call the office of state revenue for more details.
The 2016 NSW budget introduced a surcharge land tax to be paid for foreign person who own residential land in NSW. The surcharge is in addition to any land tax which may be payable.
The surcharge is 0.75% for the 2017 land tax value year. if you are a foreign person, you must pay the surcharge on top of the normal land tax, including your principle place of residence (so no tax free threshold)
A foreign person can be a individual, company or trust.
An individual, who is not an Australian citizen is a foreign person if they are not ordinarily resident in Australia
Australian CITIZIEN are NOT foreign persons, no matter where they reside.
** The information on this website contains general information and does not take into account your personal objectives, financial situation or needs. It is important you seek independent financial advice from your financial planner and account.