Wow, that's pretty complicated, a lot of moving parts.
It sounds similar to ours, the purpose of land tax anyway. It goes towards paying for public services like education, health and public safety.
Ours is a little simpler in that there's one basic way of determining it.
A person's primary residence is exempt, all other property is subject to it. Site Value (SV) must be $280,000 or more to incur the tax and one must have $450,000 of value in total SV to be subject to the tax. Multiple properties are aggregated.
So, if you have three properties with SV's of $400,000, none of which are your primary residence you don't pay. Once over $450,000 you pay. This is for commercial, rural, industrial, residential etc. The Valuer General assesses the SV and it changes, mostly upwards as years go by.
There are different rates for properties owned in a Trust and not. I'll not get into that though.
As an example:
- Non-Trust held single property (not primary residence) with SV of $500,000 = $250 land tax payable annually.
- Non-Trust held multiple properties (not primary residence) with aggregated SV of $1,000,000 = $4827.50 payable.
- Same as above but SV of $2,000,000 land tax = $27037.50
This is for my State only, each has their own laws around land tax. My State is the highest in the country though.
The idea is it penalises the people they feel can afford it most, although that thinking is a little skewed in my personal and professional opinion.
Anyway, it's a complicated subject. Thanks for enlightening me about what goes on up your way.
Well, and the same thanks to you. Very interesting. My guess is that property (primary residence excluded) often is above $450,000? Wouldn't make sense as a tax if most properties are exempt. :) Although it sounds like they get you by adding together multiple properties.
And the idea of paying $250 for a $500,000 property is absolutely amazing. Currently, we're above 20 times that much, with no ceiling in sight. When we started, our property tax was about nine times. The RMV has gone up about double in nearly 16 years, though, so that's definitely part of it, and good for us, I guess, except that most comparable homes built within the last 20 years will cost the same to buy around here, so if we stay in Oregon with our next/last move, we'll end up more or less where we are now, with a smaller mortgage then what it normally would be for the cost of the home. So still some debt and no profit.
re: land tax
What you just described sounds an awful lot like estate tax, except it doesn't happen annually, but when the property is sold. But, the similarity is you have to sell for a certain amount above what the property was originally bought for in order to incur the tax when you sell. And the fact that it's supposed to be against the rich, when its quite possible that it might affect the not-very-rich but those who stay in their homes long enough.
The whole idea that anyone needs to be penalized is a little skewed in my very personal and wholly non-professional opinion. :) Especially when the wealthy tend to know about the loopholes and what to do with this or that while Farmer Joe still living in the house he grew up in might not.
It's interesting to note that the average three bedroom house here in my city is about $500,000, but that's the entire thing, not just the site value (SV). That means that a person with a single investment property (over and above their primary residence) would avoid land tax as the SV might only be $300,000-$400,000. Of course there's many factors to that also like age and size of house. On the one I just moved out of the SV makes up about 60% of the total value.
With land tax here multiple property owners almost always have to pay it and as it's aggregated it ramps up there pretty quickly. The most I ever had at one time was 5 investment properties and my land tax bill was pretty sizable. Like I said, they want to tax those who they feel can afford it but I was an average Australian, hard working and I went without a lot to have those investments. I wasn't rich. So I disposed of them and realigned.