What is land tax?
Land tax is a tax on land value. It is based on the accumulative value of all unimproved land that you own, other than your principal place of residence in any particular state.
All states and territory governments in Australia (except the Northern Territory) impose a land tax. In the Northern Territory there is no land tax at all.
Each state or territory government not only has its own tax rate but also has certain exceptions within their laws in regard land tax, so it’s important that if buying interstate that the land tax laws for that state are understood. The office of state revenue website provides land tax rates for each state. For example in NSW the land tax is as follows:
NSW LAND TAX RATE
|2014||$412,000||$100 plus 1.6% up to the premium threshold.|
|$2,519,000 and over (Premium threshold)||$33,812 for the first $2,519,000 then 2% over that.|
For some the first one or two properties may not attract much land tax but as your property portfolio increases land tax can become quite expensive and increase the cost of your property holdings significantly. A commercial property is a good example where there could be a lot of land value, such a large warehouse or retail shop with large floor space.
Can you reduce land tax? The short answer is yes you can. Careful planning and financial structuring can assist you with the impact of land tax. Click here to learn how to save land tax.
There are a number of ways you can reduce land tax with the correct tax structure. Contact us to find out more or for a free consultation call 02 9776 8866.