It is not unusual for a couple to purchase an investment property or holiday home jointly. If the unimproved value of the property is under $1,075,000 and if it is the only additional property they own, then no land tax is payable. If however, that same couple purchases a second property such that they now own two properties in addition to their principal place of residence, and if the combined unimproved value of those two properties exceeds $1,075,000, then land tax shall be payable.
However, if the first property were purchased by one of the spouses/partners and the second property was purchased by the other spouse/partner then the land tax would be minimised as they would effectively receive the benefit of a combined threshold of $2,150,000.
If each property is in the sole name of an individual, then the land tax thresholds may not be met. For example, if the first property has an unimproved value of $800,000 and the second property has an unimproved value of $1,000,000, then each property would be below the threshold if held by each individual. However, if the two properties were purchased jointly, then the combined value would be $1,800,000 and the land tax payable by the couple would amount to $11,700.
There may be other reasons why the properties should be held jointly and therefore if an investment property is being purchased, then the advice of a competent accountant should be obtained before entering into the contract.
Please contact Cavelle Lindsay if you would like to discuss this further.
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