If you are a property investor or you are thinking about investing in property then keep reading.
Most people are familiar with stamp duty as a one-off payment when you purchase a property. Land tax is different, it is an annual or quarterly tax paid to the state or territory when your investment property is. It applies for land with our without a building, so when I say land it is the value of the land alone regardless of the building on it.
Land tax is currently a concern only for property investors however in NSW this may be changing. NSW has plans to eliminate stamp duty and replace it with a land tax which is payable for the duration of homeownership. In NSW stamp duty can be quite costly and even prohibitive to buying property. The proposal will turn this into a land tax that is payable ongoing for both owners occupiers and investors.
What does land tax currently cost for investors?
Varying state to state land tax also has thresholds and tiers – currently, for NSW the threshold is $755,000 land value.
Above this in NSW $100 plus 1.6% of the land value is payable. If your land value is $1million your land tax is $4020 for one calendar year.
VIC – Victoria has a sliding scale for land above $250,000
QLD – Queensland has a sliding scale for land above $600,000
SA – South Australia has a sliding scale for land above $450,000
WA – Western Australia has a sliding scale for land above $300,000
ACT – Australian Capital Territory has a fixed fee and a sliding scale
NT – Northern Territory does not charge land tax
TAS – Tasmania has a sliding scale for land above $25,000
As a property investor, land tax is something that you need to take into consideration as it will impact future expenses for your property. Land tax is deductible and your accountant should be able to provide you with further answers based on your circumstances.
If you are looking to purchase an investment property please contact Select Conveyancing Lane Cove as your local conveyancers.