One of the taxes not widely talked about is Land Tax. This (State Tax) is levied on owners of Land in various states. Just to confuse things the tax year goes from 1st January to 31st December. So if you own land as at the 31st December that is not your home (Principal place of residence) you may be liable for Land Tax. The taxing point is what you own on the 31st of December. No considerations are given if you have only held the property for part year or are even in the process of selling the land.

The 1st thing to consider is whether the land you own is worth more than $406,000. This is the threshold where you start paying tax. You only pay tax on the value of the land over this threshold. The tax rate is 1.6% + $100 So let's look at an example.

Assume you own 2 properties + your home. The 2 properties have a combined land value of $490,000. In this example the amount over the Land Tax Threshold is $84,000. The tax payable on this amount is $1,444 (1.6% of $84,000 + $100)

If you haven't previously registered for Land Tax & the combined value of all the land you own (less your home) is more than $406,000 you will need to register. You can register online or alternatively complete a hardcopy form. You can now also check if your Land Tax Details are up to date using the same online site. All you need is your Client ID and Correspondence ID. You can find both of these from any correspondence you have from OSR.

If you are not sure of your Land Tax liability you can go online and do the calculations yourself using the OSR Land Tax Calculator

Some other points to note.....

  • The tax rate increased is the value of your land is over $2,482,000 (the increase is to 2%)
  • If you own land with someone else you will only be assessed on your portion. But this one is tricky. 1st you will be taxed as a partnership on the land. Then you are taxed personally on your portion of the land but you receive a credit for the tax paid as part of the partnership (yes I confusing!)
  • If you sell land partway through the year you don't get a refund of the tax you have already paid. You may be able to negotiate with the purchaser though to *reimburse* you for a portion of the already paid tax
  • If you have land you are building your home on this can still be classed as your principal place of residence (and therefore exempt) as long as you don't have another Principal place of residence
  • You may be liable for the previous owners unpaid land tax. Best to ensure you check this before you purchase. You can do this by obtaining a Section 47 Clearance Certificate
  • Companies are assessed the same way a sole owner is.
  • Trusts are an entirely different story. Special Trusts don't actually qualify for the threshold. So the 1.6% is levied on all land held in the Trust.

Just when you thought taxes were being simplified!

If you own property or thinking about purchasing another one make sure you are registered for Land Tax and also consider this increased cost of holding property.