Australia has seen huge increases in property values compared with ten years ago. Although this has been great for a range of property investors, it has meant that the vexed issue of land taxation has caused an ever greater amount of hassle. In the most recent few years, property in many Australian states has only seen minimal growth overall—and there has even been decline in some areas—but overall people with a portfolio of property investments are paying more tax than a decade ago. Whilst all landowners should obviously discharge their legal responsibilities with regard to all of their tax issues, there are things that can be done to ensure that land taxes in particular are dealt with effectively. If you ask yourself whether you are paying more land tax than you might need to, then it is time to take action.
Buy Land in the Right Locations
In some hot spots in the country, land tax is high and will mean you have to fork out increasing sums every time the property is revalued. However, it should be noted that land which is not the home of an Australian citizen is not always subject to taxation. In Northern Territory, for example, there is no land tax at all on multiple properties. Since land tax is set by the state government administration, not nationally, choosing wisely where to invest your portfolio will make a big difference.
Having a good idea of your property’s value is essential for knowing how much tax is due on it and whether an official revaluation ought to be made by the taxation authorities. A quantity surveyor who can write an independent report on your behalf is often a highly effective way of reducing your land tax issues, due to overvalued property. Remember that a quantity surveyor can offer professional valuation of commercial property, farmland and dwellings, or any combination of them.
Purchase Property as Differing Entities
It is possible to make the most of tax allowances perfectly legally by purchasing land as different entities. This might mean holding one property as a joint investment with your partner, one in your name only and a third in his or her name. A fourth entity option is to hold titles to properties in the form of a trust. Given current tax regulations allow for four types of land entities to be owned, this can be an extremely tax-efficient means of owning property, depending on your other tax liabilities.