That’s interesting. I asked the state revenue office (I hold my sister’s power of attorney) and they said she had to pay the tax. Furthermore, her accountant has not suggested otherwise and the aged care specialist financial advisor I consulted when she went into care said she would have to pay it.
She does need the rental income, small as it is after all the expenses, in order to fund her aged care fees.
Not sure people moving money out of the state - which is increasingly, ever further in debt with infrastructure blowouts - is a good thing for the state.
sadly then i reckon she might be stuck with the land tax.
there is a section here about 2/3rds down for " People who have lost the ability to live independently" but it does again reference cant be used for income producing purposes
Why would the state government care of you buy an investment property interstate? Genuine question.
I was under the impression the land tax is in place to stabilise prices. If a property investor says they are better off selling and moving their money into super or another investment strategy just seems like a good thing to me.
Yes, I have read that and it appears she is indeed stuck with the tax. An additional factor is that the home is exempt from the aged pension assets and income tests provided it is used to generate income to fund her aged care. If it isn’t rented out, she would lose her pension.
While I think the editorial with Houli’s graph is a little much (and is national), it does suggest that investment buyers are outperforming owners.
Which was always…my concern with the logic of forced sales.
The idea they’d be snapped up by new homeowners (whose cost of living has become significantly worse), and not very comfortable bargain hunters adding to their portfolio.
A friend who was Guardian for her mother ( on a Pension) had the experience that selling her mother’s house within a year was more attractive financially, as she then didn’t have to pay so much of the daily cost of living there. There was also something about the assigned value of the home limited to $200 k for purposes of the asset test for the Pension.
This was pre Covid, so maybe the rules have changed.
They are about to change again with the Aged Care reforms.
Land tax is exactly what it is. A tax to feather the state government’s pocket. There is absolutely no logic to it stabilising prices. If anything all it does is force rental costs up to ensure investors can make money.
The only way it would work to truly stabilise prices is if everyone could afford to buy their own home and unfortunately that’s not going to be realistic.
So the land value is about $1,400,000 on the Council Rates notice. That is a substantial piece of property.
Edit: Wow, just looked at land values in Brighton for a 721 sq m block and it was over $3,000,000. That is huge.
You need a much better Accountant as I have friends in the same position and they are land tax exempt.
New loan commitments
It also make those who have vacant second properties or third properties, beach houses or bush blocks pay up, while not generating a income stream.
The rules change all the time. My sister is assessed under those that applied when she went into care nine years ago. At that time, but not now, rental income on her home was ignored by Centrelink as long as it was contributing to her aged carre funding.
We could sell the house and use the proceeds to pay off the refundable accommodation deposit (RAD) balance but she would lose the pension if we did so. It would make life much easier for me but is probably not optimal use of her assets, especially from an estate planning perspective. I would also have to evict her daughter and her family,
Does renting it out bring capital gains issues? If its sold now.
Assume Daughter will get house in will then lives in it so doesn’t really matter if that happens.
The latest site value is $1,360,000. That is not so much these days. It is a run of the mill, unrenovated '60s house on a quarter acre block in the eastern suburbs, about 25 km from the CBD. The site value was about $550,000 nine or ten years ago but the area has since become extremely popular with Chinese buyers due to the quality of state schools in the area and they seem to be prepared to pay almost anything to get access to those schools.
I doubt that your friends are in exactly the same position. I have checked the land tax rules following Lefty’s post and she is clearly not exempt.
Yes, it does bring CGT into play as it has been rented out for more than six years. Her children will therefore get a reduced inheritance. The daughter will no longer live in it once her mother dies.
Its interesting. I assume the Pension is worth doing your current strategy.
Did you get a valuation on the property 6 years after your sister moved out?
Is she under 75?
I had it valued by a real estate agent when she moved into care but now suspect I should have engaged a licensed valuer. We might have to have a retrospective valuation done when it is sold (I believe it is possible to do that and satisfy the ATO).
I did not have it valued after six years but understand that it is the date she stopped living there that is important.
She is well over 75.
I find it amazing that Land Values are so high.
We were looking at house in Wollongong, a couple of streets back from the sea, and there was a place with an old house for sale at $1.35 million. Small and well kept, the vacant block next door was $1.4 million. Explained that it would cost nearly $100K to clear the block, which is happening with all the old house in that location. Someone still has lots of money it seems.
So if the site is valued at $1.36 M, what is CIV ? We have a place on main street in Bacchus Marsh that Mrs Fox uses as her consulting rooms. Big block of nearly 100 sq metres with a large old wooden house, well renovated. Council CIV is $950,000 and Land value is $650,000. House is valued for insurance at replacement cost of $600,000, which may be on the low side. So it is better value fro us for the house to burn down, get our insurance payout and sell the land. Something is wrong with all of this.
All people making the world a better place to live
IDK the principal that ran my school apparently embezzled funds and lead to its eventual closure.
