More Property Tax Changes Ahead

More Property Tax Changes Ahead

State Government property taxes are more complex than ever before – as a result, property is costing more to own and develop.

 

Significant changes to State property tax regimes are impacting a range of property stakeholders. It is important to be aware of the initial and annuity costs that exist now and the pending changes from 1 July 2024.

Types of Property Tax in Australia

Property taxes differ materially across states, an important consideration for property investors that hold multi-jurisdictional assets.

 

There are several property taxes across Australia that are levied on an acquisition event and as an ongoing annuity cost. The most significant of these are stamp duty and land tax.

 

Tax TypeApplication Type
Land Transfer Duty (Stamp Duty)Transaction Based
Foreign Purchaser additional dutyTransaction Based
Windfall Gains TaxTransaction Based
Land TaxAnnuity
Vacant Residential Land Tax (VRLT)Annuity

Comparing Land Tax between States

It is an interesting exercise to compare property taxes across a few states.

 

Land tax is based on the total taxable value of land holdings, usually, the site value found on council rate notices. It is calculated by applying the appropriate land tax rate to the total taxable value of land holdings, excluding exempt land such as your home.

 

The impact of the recent tax changes, including the debt levy in Victoria, across the eastern seaboard is reflected in the table below:

 

Taxable ValueVICNSWQLD
$500,000$1,950$0$0
$1,000,000$4,650$0$4,500
$2,000,000$15,150 $14,900$21,000
$5,000,000$84,650 $62,900$62,500

 

From the 2024 land tax year, an absentee owner surcharge of 4% applies to Victorian land owned by an absentee owner. An additional 4% applies in NSW to all residential land owned by foreign persons.  Overall, Land Tax is really starting to bite, especially as the value of land increases.

 

Comparing Stamp Duty

When buying or acquiring property, you must pay land transfer duty, often known as stamp duty. Property is commonly bought or sold at auctions or by private sale but can also be gifted or acquired through a company or trust.

 

Duty is calculated on the price paid for the property or its market value, whichever is greater. It is calculated by the appropriate stamp duty rates, excluding property types or scenarios where there are exemptions or concessions.

 

Stamp Duty Input Variables

These inputs mainly impact residential property. These are the common questions to consider that impact the rate of property tax you are required to pay:

 

  • Property in regional areas for commercial, industrial or extractive industries use?
  • Are you a foreign purchaser?
  • Are you purchasing residential property?
  • Is this a new residential home, established home or vacant land?
  • Is it your principal place of residence (PPR)?
  • Is it your first home?

 

The impact of the changes recently across the eastern seaboard is reflected in the table below (assuming no exemptions apply):

 

Taxable ValueVICNSWQLD
$500,000$25,070$17,235$15,925
$1,000,000$55,000$39,735$38,025
$2,000,000$110,000 $93,055$95,525
$5,000,000$305,000 $280,480$268,025

 

A premium rate of 7% applies to the transfer of residential property in NSW if the value exceeds $3,505,000.

 

Stamp Duty Calculators are useful for assisting you to clarify what inputs or exemptions apply to your situation.

 

Victoria: State Revenue Office Victoria Stamp Duty Calculator

New South Wales: Revenue Office NSW Stamp Duty Calculator

Queensland: Queensland Revenue Office Stamp Duty Calculator

 

Victoria a clear “winner”

With impact of the changes from the 2024 tax year, Victoria remains the most expensive state to transact for property in most scenarios.

 

The Real Estate Institute of Victoria Ltd. (REIV) is advocating strongly for a review of land transfer duty fees. Their recent  February submission for the 2024-2025 Victorian State Budget “urges the Victorian State Government to initiate a comprehensive review of property tax policies and policy proposals pursuant to attracting and retaining investment in the sector.” They argue that effective land tax concessions will stimulate rental stock by incentivising investment.

 

The information contained in this article has been provided by MCP Financial Services. MCP is a long-standing member of our Professional Network team and provide debt solutions and specialist advice for Calibre clients.

 

 

We are here to help

Calibre Private Wealth Advisers provides financial leadership and peace of mind for successful professionals, business owners and their families.

 

We engage our clients in real conversations around their life and then help them use the money they have to get the best Return on Life

 

If you have any questions/thoughts in relation to this article or have a need for some advice and would like to discuss your particular situation, please contact Gordon Thoms or David Conte at Calibre Private Wealth Advisers on ph. (03) 9824 2777 or email us here.

 

The information contained in this article is of a general nature only and may not take into account your particular objectives, financial situation or needs. Accordingly, the information should not be used, relied upon or treated as a substitute for personal financial advice. While all care has been taken in the preparation of this article, no warranty is given in respect of the information provided and accordingly, neither Calibre Private Wealth Advisers, its employees or agents shall be liable for any loss (howsoever arising) with respect to decisions or actions taken as a result of you acting upon such information.

 

 

 

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