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 $6036.
If you get a huge land tax bill you may be able to lodge an objection if you think the valuation is wrong but you must have good grounds.
Simply saying you think it is too much will get you nowhere.
The NSW Valuer General says understanding how your land is valued will help you provide the best information to support your objection. Property sales are the most important factor that valuers consider when preparing land values.
Your best option is to research your local real estate market and find data that backs up your claims. Make sure the statistics you find relate to your particular area or it’s pointless.
If based on your research you’re confident the valuation is wrong then you can lodge an objection. In most states, any objections must be lodged within 60 days from the issue of the assessment and that date is usually on the front of your valuation. You should get in touch with your state’s office of state revenue (OSR) for more information on the process. In NSW contact the Valuer General.
You’ll need to provide evidence to support your case. For example, if you’ve found sales evidence provide the addresses, dates and details of how each property is or is not like yours.
Another reason could be features of the land, such as the view or nearby development. The NSW Valuer General offers this example: “Our ocean views have been blocked by a house that was built last year. I think this has reduced the value of my land.”
You can also object based on past land values if the hike is steep.
For example: “My land value has increased by 50% compared to the last one. Reports in the local paper suggest house prices in my area have only increased by 20% over that time.”
A decision can take time. In Victoria, for example, it could be 90 days. The OSR may get in touch with you if it needs more information.
If you’re not happy with the result, most states have an appeals process but this is where things can get expensive as you will need to pay for lawyers and expert valuers.