For those of you who have built up an investment property portfolio here in SA (or any Australian state or territory apart from the NT), without the proper planning and advice, you may have had a nasty surprise when opening your mail in this new financial year.
With careful planning and your Zobel Broker on your side, this need not be the case.
What is it?
Land tax is charged by the SA Government to land owners (typically residential) on the total site value (not capital value) of all SA land owned.
The tax is calculated on total land owned as at the 30th June each year and charged in advance for the coming year.
Essentially the more land you own in SA, the more you will pay – but please note there are some exemptions around this.
• You will generally not pay land tax on your owner occupied property
• There are also exemptions available on land for Primary Production
For further information on exemptions/information you can look online at www.revenuesa.sa.gov.au
How is it calculated?
Here in SA (as mentioned above) land tax is calculated on the basis of the total taxable site value of all land owned by an owner/group of owners.
It is charged on a tiered basis as follows –
Total Taxable Site Value Tax rate
Up to $316,000 $nil
$316,001 – $579,000 $0.50 for every $100 or fractional part of $100 over $316,000
$579,001 – $842,000 $1,315.00 plus $1.65 for every $100 or fractional part of $100
$842,001 – $1,052,000 $5,654.50 plus $2.40 for every $100 or fractional part of $100
Over $1,052,000 $10,694.50 plus $3.70 for every $100 or fractional part of $100
As an example, a person owns two taxable properties with a combined site value of $600,000 then total tax payable would be $1,661.50
How can you reduce/minimise land tax?
There are a couple of ways this can be done
• Spread your investments throughout Australia. By doing a little research and knowing the land tax implications of each state, you can continue to build your investment portfolio and avoid this tax at the same time.
• Consider purchasing units or apartments as part of your investment portfolio. The assessed “land value” is typically lower on these types of properties which will help reduce your land tax payments.
As with all investments, there are numerous considerations to be factored in to ensure that the property you purchase is the right one to help you achieve your financial goals.
We strongly recommend that you speak with your Accountant or tax agent before you make any decisions in relation to property investment. They know your specific circumstances and will ensure that any investment is tailored to meet your needs.