Buying property in a trust? Check the NSW land tax position first

Does a trust receive the NSW land tax threshold?

Not every trust does. Revenue NSW states that a special trust does not receive the land tax threshold, while a qualifying fixed trust is eligible. The relevant classification needs to be established from the arrangement and documents. Calling something a family trust or unit trust is not enough to resolve the question.

Source: Revenue NSW: how trusts are assessed for land tax.

Include land tax in the ownership comparison

Before comparing two ownership options, prepare the same purchase and holding assumptions for both. Ask the adviser to show where land tax enters each budget and what documents support the treatment. An ownership comparison becomes more useful when it shows ongoing costs as well as the initial setup.

Keep the assessment specific to the state where the land is located. A NSW explanation does not establish the treatment of a property in another jurisdiction.

Ask about foreign-beneficiary provisions

Revenue NSW also identifies surcharge land tax issues for discretionary trusts with foreign beneficiaries or potential beneficiaries. Its requirements address both exclusions and whether the deed can later be amended. Simply intending to distribute only to Australian family members may not settle the issue.

Have your solicitor and tax adviser assess the actual deed and any amendments. Do not copy a clause from an article into a legal document.

Build the file before making an offer

• The signed trust deed and every amendment.
• Trustee details and relevant company records.
• Details of beneficiaries or unit holders where applicable.
• The proposed property and any other land held.
• Existing land tax assessments and relevant correspondence.
• Your borrowing proposal and annual holding budget.

Ask who is responsible for confirming the classification and communicating any unresolved issue. Record the answer before the purchase moves ahead.

What if the trust already owns the property?

Start with a review of the current documents and assessments. Identify whether the issue is an incorrect assumption, missing information or a proposed change in circumstances. Do not assume that moving the property or amending the deed will produce a better result without transaction-specific advice.

Read the broader ownership comparison and use the holding-cost checklist to put the ongoing costs beside the structure decision.