Just a though about Land Tax, it's an issue that is cropping up for me now in QLD. I have watched Dale GG's efforts to diversify over the different states with his IP's, wondering how others handle the issue? I'm leaning towards the ostrich approach, ignoring it till it goes away. I'm becoming a local area expert and would prefer to keep buying in QLD. I have a HDT gathering cobwebs and depleting my bank account, but look likely to continue to buy in my own name for the next house.
I figure that so long as you can make good money and manage the cashflow hit that land tax may cause ... why worry ? I'd choose your investments based on where you think you can get the best after-tax returns, not just based on where you pay the least tax.
Land tax, however, can creep upwards to the point where it seriously begins to erode your cashflow. I have one property at the moment where 20% of rental annual income is syphoned off for the land tax bill. Consider the use of trusts carefully and get sound advice as to whether they really are the right structure for your personal situation. Also consider the state you're investing in as taxes vary as do thresholds.
I agree with Sim - choose your investments based on where you think you can get the best after-tax returns, not just based on where you pay the least tax. My strategy is to buy under different legal entities if my holding in a state under my primary entity (a discretionary family trust in my case) is approaching the threshold. I can choose between buying in my own name, my wife's name, starting a new trust, etc
Recent changes in NSW and Vic have affected land tax held by "non-fixed" trusts, such as Family or Discretionary Trusts. The change is that they now consider Unit Trusts to be "non-fixed" trusts and therefore not entitled to the $352,000 threshold (in NSW). This can mean an increase in land Tax of almost $5,984 p.a.. There are some "family" holding concessions, but take care where land tax is concerned. I think QLD still thinks of Unit Trusts as being fixed.
