Hi
Had a quick question about vicotria sro land tax rules
Im considering subletting my place out (small 2bdr ) so say half of the place.
Currently I am not paying any land tax given it is my ppor.
If I do say rent of the place out will I start paying land tax on it? I see the SRO make the decision every year in December..
I saw yes it will affect when I sell e.g. cgt but cant see anywhere if I will need to start paying land tax
It'll be a formal subletting lease arrangement
Thanks!
Good point. OP what is the actual arrangement you are looking to set up? What documentation were you thinking about to make it formal?
Keeping the arrangement as informal as possible and just renting out the bedroom in the agreement should avoid land tax*
IANALA
I rasher just decalre things etc
You will get a rash when you get your first land tax bill
Well I dont know why Op as asking us anything.
Cant take a "hint"
Will definitely end up with a rash
cash is king
loose lips sinks ships
Currently I am not paying any land tax given it is my ppor.
I read this as "Currently I am not paying any land tax given I'm poor" and thought hell of a defence when audited 🤣
Well what do you make of this line from OP?
"I rasher just decalre things"
Rather
Probably dyslexic, so no cruel jokes please.
Consider renting out just a bedroom, so you can make insane demands of your housemate and keep things nice and tense.
The state government doesn't need to know or care about anything other than whether YOU live there and thus to them it's a PPOR. I have told the Vic gov that I rent out a room (as I use an equity scheme where I have to tell them about income) and I still pay the same PPOR land tax.
Others are saying keep it cash to avoid everything, however if you declare the income, you can also then declare the relevant percentage (say, 50%) of all your expenses including loan interest and depreciation. All this is probably more than the rental income, thus you get a tax refund if that's the case. Effectively, I manage to negatively gear my own home and get back a massive tax return just because half of it is an investment property (for ATO purposes, NOT for Vic Gov purposes).
you can also then declare the relevant percentage (say, 50%) of all your expenses including loan interest and depreciation.
State land tax is a flat out rate solely based on land value. What you are referring to is federal taxes. An entirely different scenario.
Cash, I have 2 relos renting granny flats and have to pay in cash.
Great rental advise advice.
Its the only way with "relos"
And the relos have you by the balls in future… let's reduce the rent to $10 a week, shall we.
They don't rent from me lol
rent out the room and tell new tenant to be your defacto — doesnt matter if man or woman as its all to avoid paying tax on your income and future land taxes
Then they can claim part of your property after you 'break up'…
Cash in hand is king, but more importantly will the person be a tenant or boarder/lodger? If you need to evict them, both have different scenarios in how this takes place. Think about home insurance and possible ramifications. Consider drafting simple contract of the conditions, rules, etc.
Isn't this where you just call it a boarder arrangement?
The rates are progressive, that is, increase with increasing land value. Check out table her: https://www.sro.vic.gov.au/about-us/rates-and-statistics/cur…
The labor government recently and strategically reduced the land tax threshold from $300,000 to $50,000 to snare unsuspecting home owners renting out a room to lodgers. With the medium house price approaching one million a room easily qualifies for land tax.
Victorians, enjoy being taxed to the hilt whilst the labor government you voted for is out partying, spending big and oblivious to struggles of ordinary Victiorians whilst destroying the economy and safety of the state.
While I agree with the general sentiment about this pathetic degenerate government, they will never know or do anything relating to a tenant and land tax, surely? I have declared my tenant as part of the reporting requirements of an equity scheme (Vic Homebuyer Fund), and they don't care other than having me confirm that I definitely live there myself which is what keeps it as PPOR for state gov purposes.
For the most part, there are essentially no businesses generating income and operating on land values in the order of $50,000 except for PPOR's single rooms rented out to lodgers/startup businesses etc.
Make no mistake, this is a calculated move to generate another form of tax revenue. There is no other sensible reason to lower the threshold down to $50,000. That number has been specifically chosen to net most rooms used to generate income. Be aware that a WFH office could also be caught in this net.
Once income data cross-matching with the ATO is setup and systems are in place, expect a letter out of the blue extorting further taxes from citizens trying to economically survive by supplementing their income in hard times as a result of governmental mismanagement.
Ask an accountant or google harder.
Also you are just renting out a room/part of your house, not subletting - you don't 'let' your own house from yourself, so you can't sublet it. Might help with the googling to use the right terminology.