The beginning of a new financial year often brings with it a string of legislative and economic changes, including the latest amendments to Queensland’s land tax system.
As one aspect of a number of changes to the interstate properties and land tax, announced by the Palaszczuk government in December last year, state land tax will now be calculated using the total value of a property owner’s Australian land.
The changes mean that taxable land in Queensland and other relevant interstate lands will be used to calculate the relevant tax bracket that a property owner falls into.
In essence, the valuation of a property owner’s Australian land will be used to determine the tax-free threshold — $600,000 for individuals and $350,000 for companies, trustees and absentees — and in the event the threshold exceeds the rate of land tax that will be applied to the Queensland proportion of said valuation.
For example, if a person were to own $300,000 worth of Queensland property, they would be exempt from tax prior to 1 July. However, under the updated laws, if the same individual were to own $1 million worth of property in another city, they would be considered to own $1.3 million worth of taxable property — rather than the Queensland portion of $300,000, and subsequently taxed as such.
The tax is not limited to Queensland residents and will use the same parameters for non-Queensland residents who have invested in property within the state.
The changes have been labelled as a “slap in the face” to property investors by Real Estate Institute of Queensland chief executive officer Antonia Mercorella, who also scolded the state government for using the property market as a “cash cow”.
Slamming the government for effectively double taxing property investors, she said that “this treatment of property investors as an endless money pit is outrageous — the government is raking in a huge stamp duty windfall, then relying on private investors to provide the lion’s shares of housing supply, and now they’re slapping investors yet again with new taxes”.
“How can the government possibly justify slugging property investors with tax for land they own that isn’t even within our state borders? It’s utter nonsense that there’s a loophole to close,” she added.
Her sentiments were shared by Brisbane-based property consultant PK Gupta. Speaking on a video published on his Youtube channel, Mr Gupta heavily criticised the latest property tax changes, believing the amendments will disincentivise investors entering into a Queensland market currently battling a supply shortage and consequent rental crisis.
“There is a chronic shortage of housing, and therefore, if you don’t have sufficient ample property investors, rents just go up and up and up because demand is there,” he commented.
“This additional tax places another cost of holding a property, and therefore, there will be a subsector of property investors, whether they’re Brisbane locals or interstate, that think ‘hey, you know what? This has pissed me off! I’m not investing in Queensland.”
He adamantly believes the changes will see waves of property investors exit Queensland, further shrinking the supply pool of rental properties, consequently forcing rents to continue to increase further.
Ms Mercorella concurred, stating that “all this is doing is deterring people from investing in Queensland and instead, opting to invest where no multi-jurisdictional land tax applies”.
“There is no other state or territory that takes this approach, and by treating property investors with contempt like this time and time again, investors may very well pull up stumps,” she concluded.
Article source: www.smartpropertyinvestment.com.au