How many will fall into the land tax trap?

During the last ten years more so than ever before ordinary people have began to utilise wealth creation in the form of investment property and to be quite blunt the various marketers of investment property have rammed them down our throat for years now.

There has been various incentives to own investment property offered by the government as well, negative gearing which everyone would have heard of by now and yet still most people have very little idea of exactly how it applies, depreciation which requires very complex calculations for each item involved, tax relief for renting to low income tenants and deductions from personal income tax.

What it all means is that once you've signed on the dotted line and got a tenant insitue, you can hold an investment property for less than $100 a week in most cases even today after the huge boom and then the Global Financial Crisis.

And that means someone with quite a bit of disposable income in a household can end up holding several properties which are growing in capital value quite well and yet are not really causing hardship to hold , own and profit from.

Property has become one of the tools used by many who own small business and have their own DIY super funds because the benefits of buying the property from which you work and become your own tenant means you know exactly where your money is going and can mitigate any and all costs both ways.

However, there is one problem that most people have not been made aware of who may have bought up properties when they were relatively inexpensive, and accumulated a few of them, and that is with the increases we've all seen in unimproved values of properties, those investors may be up for a little thing called "Land Tax"

Land tax applies in Queensland to any one who owns property to the value (in unimproved terms)greater than $599,999 which means an ordinary couple with a home and a couple of quality investment properties may have to start thinking about that extra tax bill.

The tax is on a scale and the first part is $500 plus 1 cent for each $ more than $600,000.

So for example a North Beaudesert couple have a beautiful acreage property with a nice home on it with an unimproved value of around $450,000 and they have a couple of investment properties in quality locations valued at $300,000 each ; you can see that they are ok as far as land tax goes for now, but assume that they also have a commercial property that they run a business from, a small shop or shed with an unimproved value of $200,000 then they are going to cop an assessment for land tax.

A lot of people may be on the cusp of being assessable for this State Government Tax without even knowing but rest assured the government knows and will be issuing assessments at the end of the financial year.

here are the details for Land Tax in Queensland. forewarned is forearmed.