Land tax is one of several charges you may have to pay as an investor.
Unlike stamp duty, which is a one-off charge when you purchase a property, land tax is applied every year you own a property in accordance with your state or territory government, with the Northern Territory being exempt.
Understanding land tax and the varying thresholds for each state and territory is essential when reviewing your investment growth strategies.
Land tax is charged on any land you own or co-own above a certain value threshold, which fluctuates between states and territories. This includes vacant land purchased or the land on which the house or unit is built.
When considering land tax, your 'principal place of residence’ (where you live) is generally exempt.
The land tax you pay is determined by the 'unimproved' value of all liable property you own. The unimproved value of land is its market value under normal sales conditions, assuming there have been no structural improvements.
Like stamp duty, states and territories typically charge the tax as a percentage of the value on a sliding scale. Once the total value of the land passes the exemption threshold, you are charged a base sum plus a dollar or percentage amount for every dollar of your land’s value above the threshold.
Your state or local council will typically value your land for tax purposes.
You may have to pay anything from a few hundred dollars to several thousand dollars in land tax.
To know the thresholds and applied tax amounts, check your state or territory revenue office online to find more information.
Search tip: 'NSW (enter your state) land tax threshold 2022'.
Knowing the varying land thresholds can help you reduce this expense by spreading your investment portfolio across different states and territories.
Comments