Hi,
I've moved overseas, and renting out what was my PPOR. So, I'm now liable for land tax (NSW). Not been issued an invoice yet - when are they usually sent?
I'll be using a tax accountant for my first return, but just wanted to clarify now, is land tax 100% deductible as an expense, and is it the deduction always proportioned equally between owners (assuming equal ownership).
Thanks.
You got lucky, it's issued based on IP land you own on the 31st Dec so you won't need to pay it this year.
Land tax liabilities may be deductible, depending on when the land tax liability arises. The timing of when you incur a liability to pay land tax will depend on the relevant state legislation. Your liability to pay land tax does not rely on the lodgment of a land tax return or on the taxing authority issuing a land tax assessment. In many states, the year in which the property is used for the relevant purposes determines when you are liable, even if an assessment does not issue until a later date.
When you receive land tax assessments in arrears, the amount of land tax is not deductible in the income year in which you pay the arrears. The land tax amounts are deductible in the respective income years to which the liability for the land tax relates.
If a land owner receives a land tax assessment for a year, then later in the same financial year either sells the property or starts to use it as their residence, there is no requirement to apportion the land tax deduction. We consider that the land tax liability was incurred for an income producing purpose because the liability for it was founded in the property's use for income-producing purposes.
In the event of the property being sold and there being an adjustment of the land tax, the recovered amount should be declared as rental income by the vendor.
https://www.ato.gov.au/forms-and-instructions/rental-propert…
More info.
https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties…
Landtax calculator
https://www.apps09.revenue.nsw.gov.au/erevenue/calculators/l…
Amazing all that off the top of ya head too!
Have you actually notified OSR that you are renting it out now?
It's fully deductible. They'll track you down and tell you what you owe. My VIC PPoR became an IP in 2010. I somehow and very unintentionally got away without paying until 2021 - genuinely did not know about it. At that point, I had to back pay from 2017 onwards - a tick over $7k - due to the six year rule. Not saying that was 'the process" or that it would happen in your case, it's just what happened in my case. I do feel I dodged a bullet in terms of the back pay amount only from 2017 and without paying any penalty, which wasn't even discussed.
I would also add that five years of land tax now would be closer to $19k, thanks to the amazing capital growth the SRO claims my IP has achieved. Nearly 50% in one year (2021-2022), bumping it well over $1mill and thus way up the scale in terms of the lump sum and % per $. Their valuation is laughable and they are judge, jury and executioner and sent only a bot response when I queried the valuation and despite being shown at least 10 bigger and better properties in the area advertised for sale for less than the SRO valuation. In VIC, land tax is a cash grab to pay covid debt and it is largely left out of the rental crisis discussion.
But lets blame the landlords for exorbitant rents anyway.
I do feel I dodged a bullet in terms of the back pay amount only from 2017 and without paying any penalty, which wasn't even discussed.
Definitely. Not in Vic, but I have seen people charged more than 10 years back-land tax plus interest plus 50% penalty interest. It almost derailed their house sale.
Hence my comment about notifying the Revenue office above - AFAIK all states require you to notify them when there is a change to the status of your property.
AFAIK all states require you to notify them when there is a change to the status of your property.
Gee… I reckon that would catch 100's of people out….
For sure. A good mate was also in the same situation as me. Didn't know about it until SRO came knocking. He was only up for a few years back payment and didn't have to pay any interest/penalties either.
you normally get land tax statements in NSW in the first quarter
I got mine in January, so ymmv
You mentioned you moved overseas, are you considered a non resident for tax purposes? This will determine if it is deductible.
https://www.ato.gov.au/single-page-applications/calculatorsa…
Great. Thank you everyone.
I wasn't aware I had to notify them directly, but makes sense (I hadn't really considered though how they get the info). I am still resident for tax purposes, for now at least.
It's all done through the ServicesNSW website. I purchased PPOR recently and they already had my property for tax assessment (which I assume is through the Land Title office).
yes its a rental expense
apportionment of it can become tricky if the co ownere also own other non ppor properties in unequal shares.