Land Tax – and getting Land Tax Advice – is often forgotten or overlooked by far too many property investors. Investors tend to focus on protecting their assets, minimising taxable income through claiming various tax deductions, improving cash flow through tax withholding variation and the like. But while many property investors focus on these matters, many forget the importance of Land Tax and getting quality Land Tax Advice. That is, until, they get a shock when the land tax bill arrives, such as what happened here in Western Australia recently.
WA investors were caught out recently. They got a nasty shock when their land tax bill for 2015-2016 fell due. With land tax rates on property aggregated value of between 300,000 and 1 million increasing by 2.27 times and the next threshold over 1 million increasing by 1.55 times in 2015-2016; planning ahead before purchasing has now become more important than ever.
How Land Tax Advice from a specialist property accountant can help you save!
We recently did some calculations for a husband and wife looking to purchase a property with a $400,000 land value. They already owned 2 investment properties, one in the husband’s name and one in joint names. Both properties had land value of over $850,000. It was not an option to purchase in the wife’s name solely, however if the purchase was done in either joint names or in the husband’s name only the extra land tax payable every year would have totalled $2,582 and by the time they purchased the 4th property the land tax bill would have added another $4,160 to land tax.
How this could be avoided, is by establishing a trust structure with a company as trustee they would have been able to save at least $2,582 on the next property and probably in excess of $4,000. Negative gearing benefits could still be achieved if required if either a unit trust or Property Investor Trust.
Strategically plan and work with a specialist property tax accountant like Chan & Naylor before charging ahead with growing your property portfolio, as it could save you a lot of money and headache for the years ahead.
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Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs. Click for more detail regarding this disclaimer.