NSW Land Tax

[tom32]

A few short questions;

1. Land tax is calculated on the 31st of december each year.

It appears to read that it is assumed you pay a full years worth even if you owned the property for only 6 months or imagine you bought it on the 30th!. Looks like dividends on the 1st of january each year all 2 million dollar properties are worth 20k more than the day before...

2. Also if a block of land is incapable of being built on now due to an amalgamation restriction as part of a rezoning process but your intention is to wait for rezoning as resi and then keep 2 hectares of rural / resi zoned for your own property can you pay land tax on only 1/3 of a 6 hectare block?

3. Also what happens if it gets zoned clear space or education if the intention was originally to live there? Not worried about the profit scenario, I know you still get paid if it is for public use, just the tax implications over the period I guess capital gains come into it as well...

Land seems stuffed as an investment. You cannot negative gear it and you have to pay cap gains and land tax on it. I am all for a universal land tax but the current scheme seems to punish anyone who wants to actually build stuff with a 1.6% / 2% tax! Why not just have a 1% land tax on everyone make it easy?

4. Actually a final question which the department of land did not help me with... Has anyone disputed the value with the department of Land and won to have it reduced? If you have just bought a place for say 60% of the value at an arms length transaction compared to the VG valuation, can you say; "well their is the market value champ do I still need to pay it on 1million just cause you say so?" Actually of course I know you can say this but does it then get re-assessed on this basis?

Most such questions answer themselves in past postings this one does not seem to be answered anywhere.

 

[Terryw]

You can claim the interest on land in many instances, see FCT v Steele for authority, with the ATO putting out a TR after this case.

 

[tom32]

Thanks Terry,

The deductability question I have raised here before and I have explored Steele but had fairly ambiguous answers from here around Steele.

The issue is I cannot really have the intention to build and produce income straight off the cuff if as is the case with this block, the block is incapable of such developments initially.

I would love to be told I could but it would seem tax deductability is out of the question as I am holding onto the block to develop later, sure to produce income but this does not seem to be good enough, from steele it would seem I have to have one pursuit in mind, building and if I stray from that at all I lose any right to deductability.

Maybe I am reading it to literally? And I guess this is why I put these questions out there? Clearly it is my intention to make a quid out of the block what mug buys an investment without this purpose? Why then can't I deduct the interest in the meantime? I should add I have philosophical issues with negative gearing but the one place it would make some sence, i.e. the actual addition of supply, which I have stumbled across some semblance of a deal around in my case and I cannot use this potent way to allow seviceability.

Does not make sense on the face of it all this talk of it creating supply when the private developer who wants to add to supply cannot get access to negative gearing unless he can build straight off the bat.