N.S.W. LAND TAX EXAMPLES.

Scenario 1.

Jack and Jill each own a $2,000,000 property in their own names.

$2,000,000 - Threshold of $1,075,000 = $925,000
925,000 * .016 (1.6%) gives $14,800
+ $100 gives $14,900 each.

Total average value $4,000,000
Total land tax $29,800


Scenario 2.

Jack owns a $4,000,000 property in his name and Jill owns nil or Jill owns a $4,000,000 property in her name and Jack owns nil.
$4,000,000 - threshold of $1,075,000 = $2,925,000
$2,925,000 * .016 (1.6%) + $100 = $46,900

Total average value $4,000,000
Total land tax $46,900


Scenario 3

Jack and Jill jointly own a single $4,000,000 property.
Land tax as joint owners. Jack and Jill are referred to as the primary taxpayer.
$4,000,000 - Threshold of $1,075,000 = $2,925.000
2,925,000 * .016(1.6%) gives  $46,800
+$100 gives a primary land tax payable of $46,900

Note. There is a stamp duty exemption in N.S.W. for married couples transferring properties to joint ownership but it will not reduce the land tax.

Total average value $4,000,000
Total land tax $46,900


Scenario 4.

Jack and Jill jointly own a $4,000,000 property (X) and Jill owns a $1,000,000 property (Y) in her own name.

They get 2 Tax bills, one to both names jointly for the joint property and one to Jill for her share of the jointly owned property and the whole the property in her name. This is a more complicated calculation to make an adjustment to mitigate bring taxed twice.

To calculate joint bill.

$4,000,000 - Threshold of $1,075,000 = $2,925,000
$2,925,000 * .016 (1.6%) gives $46,800
+ $100 gives $46,900

So Jack pays $23,450. joint tax = $46,900
Note Jack and Jill can divide the payment in any way so long as they pay the total.

To calculate Jill's bill.
Jill's bill is for 50% of the joint property (X) plus her fully owned property but she also has a joint bill for the same 50% of (X).
To mitigate this double taxation, the tax on the double taxed land is deducted from her bill.
This double taxed land has two values and the lower one is deducted, darn it.
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The first way to value this 50% of (X) is to take the total tax on (X) and proportion it in the same way that the joint land is proportioned.

Note that not always is the the double taxed land 50%. If there were 3 joint owners it would be 33.333%.
The above deduction depends on the tax rate on (X).

First possible deduction 1/2(X) $2,000,000 / (X) $4,000,000 * (joint tax) $46,900 = $23,450
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The second way to value this 50% of (X)  is to take the total tax on (Y) + 50% (X)  and proportional it in the same way Jill's land is proportioned.

Calculate  Jill's land value.
Of the joint property (X) Jill owns 50%. 50% of the land value = $2,000,000 therefore
Her total land value = $1,000,000 (Y) + $2,000,000 {1/2(X)}= $3,000,000.

Calculate the tax on the land value.
Individual calculation 3,000,000 (Y) + 1/2(X)  - Threshold of 1,075,000 = 1,925,000 * .016 = $30,800 + $100 = $30,900

Second possible deduction B 1/2(X) $2,000,000 / (Y) + 1/2/(X) $3,000,000 * $30,900 = $20,600
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Land tax payable = $30,900 - smallest deduction $20,600 = $10,300

Total land tax $46,900 + $10,300 = $57,200


Total average value $5,000,000
Total land tax  $57,200


Scenario 5.


Jack and Jill jointly own a $2,000,000 property (X) and Jill owns a $2,000,000 property (Y) in her own name.

They get 2 Tax bills, one to both names jointly for the joint property and one to Jill for her share of the jointly owned property and the whole property in her name. This is a more complicated calculation to avoid bring taxed twice.

To calculate joint bill.

$2,000,000 - Threshold of $1,075,000 = $925,000
925,000 * .016 (1.6%) gives $14,800
+ $100 gives $14,900

So Jack pays $7,450. Joint tax = $14,900

To calculate the Jill's bill.

Of the joint property Jill owns 50%. 50% of the land value = $1,000,000 therefore
Her total land value {1/2(X)+(Y)}= $1,000,000 + $2,000,000 = $3,000,000

Individual calculation 3,000,000 - 1,075,000 = 1,925,000 * .016 = $30,800 + $100 = $30,900

Secondary deduction A{1/2(X)} 1,000,000 / (X) 2,000,000  * 14,900 = $7,450

Secondary deduction B {1/2(X)} $1,000,000 / {1/2(X)+(Y)}$3,000,000 * $30,900 = $10,300

Land tax payable = $30.900 - smallest deduction $7,450 = $23,450

Total land tax $14,900 + $23,450 = $38,350

Average value $4,000,000
Total land tax  $38,350  


Scenario 6.

Jack and Jill each have a $1,000,000 property (Y) or (Z) in their own name and a $2,000,000 property (X) in joint names.

Jack and Jill together own property (X) so joint tax = $2,000,000 - $1,075,000 *.016 +$100 = $14,900

Jack and Jill as separate entities each own 50% of property (X) and a 100% of property.(Y) or (Z)
So tax for (Y) or (Z) = $1,000,000 +$1,000,000 - $1,075,000 *.016 +100 = $14,900 

a)  interest in (X) = 1,000,000 / total (X) $2,000,000 * tax on property (X)  = 1/2 * $14,900 = $7,450
b) interest in (X) = 1,000,000 / 50% (X) + 100% (Y) or (Z) = $2,000,000 * tax on joint property of $14,900 = $7,450

Their individual tax for (Y) or (Z)  =  $14,900  -  less the smaller of a) or b). $7,450 = $7,450
 
Total tax = $14,900 joint tax on (X) + $7,450 individual tax on (Y) + 7,450 individual tax on (Z) = $29,800

Average value $4,000,000
Total land tax  $29,800

Scenario 7

Jack and Jill jointly own property A and Jill owns property B.
Property A and B both have a value of $1,756,667

-------------------------------bill 1--------------------------
Land value of property A 1,756,667 - threshold 1,075,000 = 681,667 * .016 = 10,906 + 100 = 11,007
Jack pays 5,503 Jill pays 5,503 + bill 2 for land tax on her total land.
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-------------------------------bill 2--------------------------
Jill owns property B value 1,756,667 + 50% of property A 878,333 = 2,635,000
Land tax on that = 2,635,000 - 1,075,000 = 1,560,000 * .016 + 100 = 25,060

You can see that bill 1 combined with a bill for 25,060 results in being taxed twice on 50% of property A. This double tax has two values, one calculated at the rate of tax on joint ownership of property A and one on the rate  of tax on 50% of property A + property B as is worked out above. The amount of land that has been taxed twice is 50% of property A.

Calculating the two possible discounts.

Tax on property A * amount of property A land double taxed / property A land = Double tax.
Therefore 11,007 * 878,335 / 1,756,667 = 5,503

The other possible discount is proportional to the amount of land taxed twice (the same) to the total land involved with this tax rate. 50% of property A / 50% of property A + 100% property B * tax on property A.  878,333/878,333 + 1,756,667 * 25,060 = 8,353

Thus this tax = Taking off the lower of 5,503 and 8,353.  25,067 - 5,503 = 19,564 
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Total land tax payable 11,007 + 19,564 = 30,571 for both properties.

Land tax In summery

If property B and property A held in separate names total tax = 22,014
If property B held by Jill and property A held in joint names   = 30,571
If both held by Jill                                                                  = 39,113