How To Avoid Land Tax for Properties

Land Tax

In February of this year, I wrote an article explaining how property investors could completely avoid land tax by using multiple self managed super accounts to assure the total land value of their property portfolio would be spread. Hence, they will never exceed the tax-free threshold.

However, for those of us that may be unwilling to perform this strategy, there is another method that can exempt you from land tax.

Land tax is a form of taxation applied to the value of any land that is not an individual’s primary place of residence.

Since this tax is a state based tax, only the value of land in each individual state is considered. This allows you to have a larger portfolio in terms of land value and still avoid land tax if you purchase land in separate states.

Consider this hypothetical situation with Ali, who is a property investor.

Ali owns an investment property in Sydney valued at $310,000. He wants to expand his property portfolio with a property that has land valued at approximately $200,000.  If he purchases this second property in New South Wales, he will be obliged to pay $1,348 in land tax as he will exceed the New South Wales land tax free threshold of $432,000 by $78,000.

However, if Ali purchases this second property in Queensland he will have land valued under the land tax free threshold of Queensland ($600,000) and New South Wales ($432,000) and hence be exempt from land tax.

If you are looking to expand your property portfolio, it is advised that you contact a financial advisor to see if you may be able to use this strategy to avoid land tax in your portfolio.

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