{"id":15866,"date":"2021-08-17T09:37:38","date_gmt":"2021-08-16T23:37:38","guid":{"rendered":"https:\/\/www.prosolution.com.au\/?p=15866"},"modified":"2021-08-17T11:29:51","modified_gmt":"2021-08-17T01:29:51","slug":"land-tax","status":"publish","type":"post","link":"https:\/\/wealthcoach.com.au\/stage\/land-tax\/","title":{"rendered":"Land tax minimisation (elimination) strategies"},"content":{"rendered":"\n
\"land<\/figure>\n\n\n\n

Land tax is levied on the value of an investor\u2019s landholdings on 31 December each year. It is an insidious tax as any land tax is relatively small when you initially purchase an investment property but typically increases each year. As such, the problem is that it can become quite costly by the time you reach retirement \u2013 a time when it\u2019s preferrable to pay less tax, not more.<\/p>\n\n\n\n

There may be several opportunities to minimise land tax which are discussed in this blog.<\/p>\n\n\n\n

Land value is a vital attribute of an investment-grade property<\/h3>\n\n\n\n

The value of a property comprises of the value of the underlying land plus the dwelling\u2019s value (i.e. improvements that are permanently located on the land). Typically, land appreciates in value over time whereas buildings depreciate. Therefore, to maximise your property\u2019s rate of capital growth, you must invest in property\u2019s that have a high land value i.e. more than 50% of the property\u2019s value should be in the land.<\/p>\n\n\n\n

There are a couple of consequences of investing in high land value properties:<\/p>\n\n\n\n

  1. High land value properties tend to produce low rental yields. That\u2019s because renters don\u2019t really care about the value of the underlying land. Renters are more impressed by the size and quality of the accommodation; and<\/li>
  2. High land value properties attract higher land tax liabilities.<\/li><\/ol>\n\n\n\n

    Remember, the power of compounding capital growth<\/a> more than compensates investors for these disadvantages.<\/p>\n\n\n\n