The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1407 - MASSIVE LAND TAX CHANGES FOR NSW... SECRETLY RELEASED
Are you losing thousands in unnecessary land tax payments every year? This eye-opening discussion reveals the hidden tax burden that's crushing property investors' returns across New South Wales.
We dive deep into the mechanics of land tax, demonstrating how this seemingly small 1.6% levy can drain up to $10,000 annually from a typical Northern Beaches investment property. More importantly, we unveil the strategic difference between houses and units that could save you a quarter-million dollars over ten years of investing. Through clear examples, we demonstrate how owning three units can result in zero land tax while a single house of equivalent value triggers a $10,000 annual bill.
The government's recent freezing of thresholds has created massive bracket creep, silently increasing investor tax burdens by approximately 30% annually as property values rise but thresholds remain static. This isn't just theoretical - we walk you through the exact steps to research any property's land tax liability using the NSW Valuer General's website, empowering you with crucial knowledge before your next purchase.
Property investing success increasingly depends on understanding these hidden costs. Whether you're a seasoned investor or just starting out, mastering these land tax principles will dramatically improve your investment outcomes. Text LAND TAX to 0460 111 111 now to receive our calculations and search instructions, and transform yourself into a true land tax ninja.
all right, we're gonna teach you how to be a New South Wales land tax ninja. If you're a property investor or considering becoming a property investor, we're gonna show you A to Z all about land tax in 10 minutes. Stay tuned, I'm the ringleader.
Speaker 2:Billy Drury, the property doctor Not Novak with 30 years experience. We're talking about land tax this morning. The most significant cost to a property provider other than interest rates Creeps up on you.
Speaker 1:It creeps up on you and you know what? If you're good at it, you're going to minimize a lot of money. I'm talking maybe a quarter of a million dollars. You're going to save over the course of 10 years. But if you're bad at it, you're going to get punished, really, really punished yeah, this is interesting.
Speaker 2:So it's. It affects cash flow. Um, it's based on the land value, not the property value, um, and there has been bracket creep in the last two years big time, I think, to unpack like I was at a um.
Speaker 1:I was at a lunch yesterday with some friends and some people don't know what it is, so just to just to unpack what it is. The ucv, the unencumbered value, is effectively the land value that the government puts annually on your property. Now, the reason the government annually puts this on your property is because it's a. It's a moving target. The value it's generally going up all the time. So you as a property owner, whether you're an investor or an owner occupier, you'll get a letter from the value of general of New South Wales saying your value as of this day is this Yep.
Speaker 2:And then what happens?
Speaker 1:When you own property over a certain value we call it a threshold, or the government calls it a threshold. When you own property over a certain threshold, they will charge you every year 1.6 percent on what's over the threshold. So a working example is if your property is worth uh 1.6 million dollars and that's your land value of your property in narrowana in northern beaches, then and it's an investment property, not this doesn't apply to owner occupy propertiesied properties, sony investment properties then that six hundred grand will be taxed in that year at a rate of 1.6 percent, which I think is going to be about nine or ten thousand dollars. You're gonna have to cut a check to the government that this year for on that property. The next year it will be born yeah, okay.
Speaker 2:So where do you want to start? Should we show the last 10 years, or should we show a working example?
Speaker 1:let's show a working example okay.
Speaker 2:So this is a really relevant topic and it will apply to the average mum and dad, I think, even more so if you if you're um, you know acquiring property through your 20s, 30s, 40s, 50s you get to the point where you're trying to hold an asset and you move away from the family home and go rent it out.
Speaker 1:This will apply to Okay, so the first thing to get your attention is if you can own effectively three units and pay no land tax every single year, or you can own one house of the same value of three units and have to cut a cheque of 10 grand every year. Do you want to explain how that works, this in here?
Speaker 2:yeah, let me just uh bring up that photo and a little bit of a more zoomed in. So yeah, that that's exactly right. So example one that's on the left hand side um is the purchase of a house now. Now the purchase price $2.3 million, the land value maybe $1.7 million. The New South Wales threshold is $1,075,000. So the land tax payable is $1.7 million minus the mill, 75. You times that by 1.6% and that gives you ten thousand dollars a year. That's your land tax bill and you we were talking about it off air. There's no notice for this bill, not like a strata levy where you get three months notice and it's sort of um scheduled. This comes in pretty much one hit Bam Hits you between the eyes. Example two is three apartments. Say you own them in DY, down the road from Narrowena, five minutes drive. Purchase price $750,000. The land value there $300,000. Below that threshold you could own three properties.
Speaker 1:You'd pay no land tax. Okay, so you can have 2.3 of house and you got 10 grand a year land tax. You can have 2.2 2.3 of units and have zero land tax. Watch your land tax guys.
Speaker 2:Watch your land tax yeah, might seem obvious, but if you're wondering how that could be the case, owning the same amount of same amount of, uh, gross value between two different asset classes? Because with apartment blocks obviously you're dividing that land value by the number of lots, so the entitlement is smaller. Oh, good point.
Speaker 1:Good point. So if the land value is, say, $3 million on the unit block, then you divide that $3 million. Say, if there's 10 units of equal entitlement, then you divide it by 10 units, you're left with a $300 grand bill.
Speaker 2:Yeah, pretty much.
Speaker 1:Now we're going to get dirty.
Speaker 2:We're going to show you where you can find your own.
Speaker 1:Okay, let's do that first. That's not the dirty bit, but let's do the clean bit first. Okay, so if you want to have a look, say you're looking to buy an investment property and you are curious as to what the land tax threshold be I would guess that you're going to ask a real estate agent and they're not going to know what the number is. This is how you can search for the number of the land tax of any house in new south wales and any unit in new south wales.
Speaker 2:Over to you, billy bob first of all, we've we've applied the link there so you can copy and paste this out of the comments. That'll take you straight to what we're about to show you on the share screen. Yeah, copy and paste this link, put it into your web browser, google safari wherever you want, and follow the next step if you just tuned in, we're going to make you land tax ninjas in this session and off you go, billy okay, so hit that link.
Speaker 2:That'll take you here. Yes, now back to you it's a tennis match.
Speaker 1:It looks really boring. Uh, okay, hit property address. It's much. It looks really boring. Uh okay, hit property address. Um, where am I looking? That's center of the screen. Second link on the, on the middle of the screen bingo, okay, let's do. Let's do uh, narrow wiener. All right, let me move off the camera. Let's do. Nimby Typical street in Narraweena, typical suburb Northern Beaches, n-i-m-b-e-y. Let's do. 42.
Speaker 2:And I'm not a robot. Perform the search you are not a robot.
Speaker 1:Okay, there's the blue, the numbers in the blue there.
Speaker 2:Hit that one, tell it you're not a robot again and this value a year valuing year, first of july July 2024.
Speaker 1:Oh, oh, okay, okay, yeah, great.
Speaker 2:Hit that.
Speaker 1:Yep, I wonder how much has changed in five years this property. There's your land tax guys, that's how you search it. How much is it?
Speaker 2:So we've, got.
Speaker 1:Here's the number.
Speaker 2:The net land value. Is there how much? 1.58.
Speaker 1:Okay, so a typical block of land house narrow weiner, like entry-level house is probably 2 to 2.2, and the typical land value for narrow weiner is 1.6. So go back to my working example. This cat's gonna come up with ten grand a year of land tax. This property and the property yeah, that's 200 bucks a week, billy. Now if you go over and buy another house, you're actually paying off. You're not getting a threshold applied. So, guys and girls are, we've just shown you how to look up any land tax on any property. You don't have to. Just shown you how to look up any land tax on any property. You don't have to own the property. You can look up your next-door neighbors land tax. That's how you look up the land tax in any house or any unit. I'm doing to do a unit as well, just to show what that looks like yeah, let's do let's do.
Speaker 1:For slash you search, let's go property address second link ah, it's go, let's go. Have you got a? Do I dress?
Speaker 2:yep, can do. Let's choose a lucky number above our apartment block 502, 822. Yep, 840. Oh yeah.
Speaker 1:So we're looking. This is how to identify. If you just tune in, guys, this is how to identify land tax on any property in New South Wales. It's exploded. Our friends in government have really escalated these costs. It's exploded and we're going to show you what the difference is between a house and a unit on land tax. The house value according to the, the. The land value a general of um 1.6 for a house. Now show me billy, show me hey, what are you?
Speaker 2:doing eight, two, two, yeah, but it's uh, it doesn't like the building number, probably not bound okay, let's go four.
Speaker 1:At 38 beach street, curl curl okay, let's go for it.
Speaker 2:38 Beach Street curl curl maybe not a mosque.
Speaker 1:We're gonna go to Moscow. Probably not the best example. Billy, that's a block of three. I want to choose a larger block as an average. As an average, for maybe, if you can get blocked for 38 Beach Street's, a block of 12. So this is important because the divisibility is over. You know that amount 48, 38, okay 4 at 32? 4 at 38 Beach Street. So you're going to street number is 38, is not is 38,. Billy 4 at 38 Beach Street.
Speaker 2:There you go.
Speaker 1:Okay, let's choose a unit there, number four, so you can see how many are in the building. Let's have a look at the land, the value, what they put on the value Okay, so it's $7 million for the land that the value are. What they put on the value. Okay, so it's seven million dollars for the value of the land. That geez, that's gone up a lot lately, I've got to have to say. And you divide that by 12 units, so that'll be probably about 400 000. Um, it's my um 400 000 per unit for a unit that's worth. Guess what that unit's worth? Two million dollars, by the way.
Speaker 1:Um, so there's an example of a property worth two million, uh, a house on the unit average and the land value difference of 400 000 to1.6 million. It's massive. So, guys, what's really scary and this is the biggest fundamental change to a landlord's cost is the thresholds over the last 10 years and how much they haven't changed. So what people don't know is our friends in government have now frozen the thresholds which are now going to increase landlord costs. On that example, I've given today about 30% a year more. So if you have a look at your thresholds that Billy's going to bring up, you're going to see that the last 10 years, when they actually put thresholds on the properties, they increase them.
Speaker 2:They do. I'm just going to, I'm going to bring that share screen up for you. There you go.
Speaker 1:Okay, so have a look at that. Can you zoom up on that Bill?
Speaker 2:Little bit. How's that?
Speaker 1:bill a little bit. How's that? So that's cool. So if you are below the threshold, you will pay no land tax. If you are above the threshold, you will pay land tax to the tune of 1.6 percent. So in the last 10 years, the threshold has changed from 482 to a million075,000,. But have a look at what has happened in the last two years. Why are the? So if these values go up, that's good. That's your break that you have underneath that figure. You have a look at the last two years no break, same figure. So, even though the property values are going up, you have a look at the last two years no break, same figure. So, even though the property values are going up, the government is now no longer acknowledging that and they have frozen those thresholds. So you will pay more tax as a landlord every year. Land tax has now significantly, and the consideration of it, become more important.
Speaker 2:Yeah, and it applies to more people. It applies to a lot more people. There you go.
Speaker 1:It's called bracket creep. It's happened with stamp duty and people have been smashed with 4% stamp duty because the bracket did not creep any longer. Now everyone's going to be creeping over that bracket much more. Guys, the message from today is watch your bloody land tax. It's going out of control at the moment, straight out of your pocket into the governments.
Speaker 2:Yeah, there you go. Thank you very much.
Speaker 1:It's really scary. If you want to learn what we've told you today, 0460 111 111, send the word land tax and we'll send you the calculations and how to do what we've done today, so you yourself can search your own land tax on your investment properties, or you yourself can search land tax on any other property in New South Wales yeah, brilliant.
Speaker 2:Zero four, six, zero, triple one, triple one the word land tax and send the word land tax.
Speaker 1:Yeah, okay, perfect.
Speaker 2:thanks, billy Bob. Thank you everyone, bye-bye.