How Savvy Investors Minimise Land Tax
Clever investors have learnt that purchasing property in the name of the person that hasn’t used the respective state’s threshold can save them a bit of cash. For example, in a husband-and-wife ownership scenario, if the husband already has a property in his name (excluding your Principal Place of Residence (PPOR)) and has used up the threshold in that state, they might acquire the property in the wife’s name to absorb a new threshold.
Smart investors tend to purchase apartments instead of houses. Apartments generally have a lower land component than houses so investors can potentially own several apartments before hitting thresholds in some states. You should check the land component of your prospective investment to determine whether you have reached any respective thresholds.
Shrewd investors are known for using separate entities like Fixed Trusts or companies, which entitle them to separate thresholds on each property. However, before acquiring an investment in such a structure, make sure you seek independent tax advice as tax treatment could be different than if you acquired the property in your own name, and each state has different rules for entities.
Astute investors tend to consider the timing of sales and purchases on land and the Date of Assessment for Land Tax in a particular state. For example, if they are selling a property, they ensure that they settle prior to the Land Tax assessment anniversary. If you are selling property, just be mindful that you may still be obliged to pay the Land Tax for the following year if you have not settled before this date.
Wise investors usually own properties in several states. If all their properties were owned in the one state, they would normally exceed the Land Tax threshold. If, however, they spread their investment properties over several states then there would be less Land Tax to pay.
Of course, these are just tips and tricks and should only be used as general information. It is always advised that you seek out your own tax advice from a specialist accountant who understands the complexities of Land Tax in different states. If you’re looking to purchase your next investment property, however, make sure you give our helpful team of property experts a call today.
When you know the facts about the value of your most important asset you can make smarter decisions that more positively affect your current and future financial wellbeing.