Land Tax Question

[Tyla]

I have a land tax question for my friend. He had property A as PPOR until 2013. In 2011, he bought a block of land to build his future PPOR (Property B). In 2013, he moved to B and converted A into IP.

He has been told by land tax office that
- he is liable for land tax for B between 2011 and 2013
- but if he hadn't had A and had been renting during that time, he would have been exempted.

Is he liable? Is there some way to minimise it (eg choosing to nominate B as PPOR and A as holiday house/IP as in CGT treatment)?

 

[Terry_w]

Depends on the state the land is, the values and a few other things.

Is he going to claim he was living on vacant land?

Probably liable if in NSW.

 

[Tyla]

Thanks, Terry. The properties are in NSW. I would like to know if there is some legit way to avoid/minimise it because it was genuinely for PPOR and he moved in as soon as completed and it has never been rented.

 

[jrc]

Thanks, Terry. The properties are in NSW. I would like to know if there is some legit way to avoid/minimise it because it was genuinely for PPOR and he moved in as soon as completed and it has never been rented.

It seems from what you have written earlier that the owner had another property he was claiming as PPOR. Unless he can come within the exemption in Clause 7 Schedule 1A which only applies for one tax year it is unlikely he will succeed

 

[Terry_w]

It could be that the person can choose which to apply the exemption to. This may save some land tax.

 

[Scott No Mates]

That is assuming that you can nominate vacant land without an occupancy certificate as a ppor.

 

[Terry_w]

That is assuming that you can nominate vacant land without an occupancy certificate as a ppor.

in NSW you can for unoccupied land intented to the be the owners PPOR. Strict conditions though.

 

[Tyla]

in NSW you can for unoccupied land intented to the be the owners PPOR. Strict conditions though.

What kind of conditions? Any link for further reading? Thanks

 

[Terry_w]

What kind of conditions? Any link for further reading? Thanks

Look for the land tax management act schedule 1A. Cl 6 from memory.

 

[Tyla]

Thanks, Terry.

 

[Paul@PFI]

I have a land tax question for my friend. He had property A as PPOR until 2013. In 2011, he bought a block of land to build his future PPOR (Property B). In 2013, he moved to B and converted A into IP.

He has been told by land tax office that
- he is liable for land tax for B between 2011 and 2013
- but if he hadn't had A and had been renting during that time, he would have been exempted.

Is he liable? Is there some way to minimise it (eg choosing to nominate B as PPOR and A as holiday house/IP as in CGT treatment)?

Incorrect - Vacant land (B) is not eligible for the residence exemption. Vacant land can often only pass the primary production exemption spanning several years. Its one of the few exemptions available (NSW) that spans several tax periods. However it requires predominant use in primary production income generation.

Your best bet may be the Clause 6 exemption - details here in the Ruling. You must apply for the ruling to apply. OSR don't seem to tell people that.

 

[Tyla]

Incorrect - Vacant land (B) is not eligible for the residence exemption. Vacant land can often only pass the primary production exemption spanning several years. Its one of the few exemptions available (NSW) that spans several tax periods. However it requires predominant use in primary production income generation.

Your best bet may be the Clause 6 exemption - details here in the Ruling. You must apply for the ruling to apply. OSR don't seem to tell people that.

Thanks for that info, Paul. So basically he may be able to choose which property he wants to treat as PPR. That may save him some money.