NSW Property Investors Land Tax Objection Guide
One of the expenses that comes with being a property investor is land tax. This is a state-based tax that is levied on the land value component of property held by investors. All states and territories, except the Northern Territory, charge land tax at different rates and using different thresholds. In NSW, for example, land tax in 2018 kicks in when the value is more than $629,000 and is charged at a rate of $100 plus 1.6% up to the premium threshold of $3,846,000, then 2% over that. So for a land value of $1 million your land tax bill would be $6,036.
It is that time of year again and many property investors would have received their Land tax assessment notices for 2019. With the market softening, it is apparent that in some cases UCV (Unimproved Capital Value) assessments seem to have increased where in fact, I believe should have reduced or remained static.
A recent media article highlights and debates this very issue.
If you have received your land tax assessment notice for 2019 and you believe that your assessment is too high I would strongly encourage you to lodge an objection with the Valuer General of NSW. This is a simple process, and detailed information on how to object online is available here.
All you need to do is:
- Click online objection facility at the above website
- Click and insert details to be emailed an activation key
- Enter the activation key code and property number from your notice
Complete details and enter the reasons for your objection
Objections must be lodged within 60 days of receipt of your assessment notice. Please also note that you must pay your assessment notice as its due despite lodging an objection or face interest penalty.
When entering your reasons for your objection, please remember:
- Always include relevant sales evidence – speak to a local real estate agent or better still a registered valuer will need to conduct a valuation and provide such evidence as an expert opinion. In one case we are aware of a registered valuer estimated a valuation $350,000 under the Valuer Generals and also did a 5 year back track valuation of subsequent years with a total sum differential close to $900,000. If this property owner is successful with their objection then this could result in a refund of close to $18,000 of land tax for an investment of $1,000 for the valuation report.
- Do some online research like veining recent sales on realestate.com.au(not asking prices but actual sales results are necessary) ideally at least three relevant sales. Search here: https://www.realestate.com.au/sold/
- You can also find useful property data via NSW FACS website.
- Your sales evidence should be worded like this:
- 123 Landtax St Everytown sold in June 2018 for $500,000. It is a 3 bedroom weatherboard house with double garage and land area of 600m². After allowing for the value of the improvements, the land has an analysed value of $300,000. Overall, this is superior to the subject property. It is a larger site has superior views and leveled access.
- Be sure to include any detrimental features of the property – access is poor, topography makes it difficult to build, it is burdened by a significant easement for storm water, views have been obscured by recent construction, etc.
- Do not include newspaper articles or general information from the media as this evidence is treated as hype and not factual.
- It can take up to 90 days to receive a reply after lodging your objection.
The Valuer General publishes a guide to objections which contains useful information.
If you are successful in your objection, please let me know by contacting Real Property Manager as we would like to collect some case studies.
Good luck!