Qld Govt Announce A ‘New Land Tax’ For Investors
Investors always seem to make easy targets, either when APRA wants to take the heat out of the market, or a government wants to make a bit more tax money out of a surging property sector.
And the latest state government to cash in is Qld, where it was recently announced that investors from interstate would be targeted with a tax hike.
Qld Treasurer Cameron Dick announced in the mid-year budget update that investors would be assessed on their portfolios on a national level when calculating land tax, rather than only on the portion of their portfolio located in Qld.
Basically, what that means is that previously, if you owned investment properties in Qld that were worth less than certain caps, say less than $600,000, you were under the tax-free threshold for land holdings, regardless of what you owned in other states.
If you owned $1 million of property based in Qld, you paid tax at a rate of 0.45%. But if your $1 million was split across other states too, you’d only pay the equivalent of 0.05% land tax.
Now, however, investors will have the value of their investment properties in other states assessed, when the tax they pay in Qld is calculated. Queensland owner-occupiers will not be affected.
But can they do that?
Short answer is yes. The tax they are charging you is on your Qld property, even though your portfolio is assessed at a national level.
Qld is in the midst of its first property boom in many years, and just like states in their position in the past, they are set to make a windfall from the usual taxes like stamp duty.
But for a long time, southeast Qld properties have been targeted by investors from Sydney and Melbourne and the government wants to be able to bring in extra income from down south too.
Or “close a loophole” as the Treasurer put it this week.
What are the flow-on effects?
First things first, investors don’t always just absorb the extra taxes they are stung for. Often, as long as the market is agreeable, landlords will pass the taxes on in the form of rent increases.
So it’s little surprise that some of those against the new rule are already dubbing it a tax on renters.
An investor with $600,000 worth of property in Qld and, say $500,000 worth in other states, would be looking at paying $3000 or more a year in land tax.
That’s close to $60 a week. That can take a property portfolio from positive cashflow to negative, so it would be foolish to think savvy investors would grin and bear it.
For all the vitriol aimed at investors, it should be remembered that they play a vital role in a functioning economic society. Landlords are needed to provide housing for the 25 to 30% of the adult population that need properties to rent.
Punishing investors over and over again runs the risk of prompting a bunch of them to sell up and move their money elsewhere.
And the next buyers of those properties might choose to be owner-occupiers or to lease them short term, like AirBnb. So, the risk is that the supply of rental properties would be lessened, which would also put upwards pressure on rental prices.
Walking a fine line
While the Qld govt may make tens of millions of dollars from interstate investors with this decision, they run the risk of lessening the supply of investment properties and also causing rental hikes for tenants.
And more pressure on the financially vulnerable at a difficult time could cause other problems for the government down the track.
For more information on this and how to build your portfolio the smart way, reach out to b Invested on 1300 367 925, or at email@example.com
𝘋𝘪𝘴𝘤𝘭𝘢𝘪𝘮𝘦𝘳: 𝘉𝘪𝘯𝘷𝘦𝘴𝘵𝘦𝘥.𝘤𝘰𝘮.𝘢𝘶 𝘗𝘵𝘺 𝘓𝘵𝘥 𝘈𝘊𝘕 154 400 370 𝘮𝘦𝘢𝘯𝘴 (“𝘣 𝘐𝘯𝘷𝘦𝘴𝘵𝘦𝘥“) 𝘩𝘢𝘴 𝘱𝘳𝘦𝘱𝘢𝘳𝘦𝘥 𝘵𝘩𝘦 𝘧𝘰𝘭𝘭𝘰𝘸𝘪𝘯𝘨 𝘮𝘢𝘵𝘦𝘳𝘪𝘢𝘭. 𝘛𝘩𝘦 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 (“𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯”) 𝘱𝘳𝘰𝘷𝘪𝘥𝘦𝘥 𝘪𝘯 𝘵𝘩𝘪𝘴 𝘸𝘦𝘣𝘴𝘪𝘵𝘦 𝘢𝘯𝘥 𝘵𝘩𝘦 𝘧𝘰𝘭𝘭𝘰𝘸𝘪𝘯𝘨 𝘮𝘢𝘵𝘦𝘳𝘪𝘢𝘭 𝘪𝘴 𝘨𝘦𝘯𝘦𝘳𝘢𝘭 𝘪𝘯 𝘯𝘢𝘵𝘶𝘳𝘦 𝘰𝘯𝘭𝘺 𝘢𝘯𝘥 𝘥𝘰𝘦𝘴 𝘯𝘰𝘵 𝘤𝘰𝘯𝘴𝘵𝘪𝘵𝘶𝘵𝘦 𝘢𝘯𝘺 𝘵𝘺𝘱𝘦 𝘰𝘧 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘢𝘥𝘷𝘪𝘤𝘦. 𝘉𝘦𝘧𝘰𝘳𝘦 𝘮𝘢𝘬𝘪𝘯𝘨 𝘢𝘯𝘺 𝘥𝘦𝘤𝘪𝘴𝘪𝘰𝘯, 𝘪𝘵 𝘪𝘴 𝘪𝘮𝘱𝘰𝘳𝘵𝘢𝘯𝘵 𝘵𝘩𝘢𝘵 𝘺𝘰𝘶 𝘴𝘩𝘰𝘶𝘭𝘥 𝘴𝘦𝘦𝘬 𝘢𝘱𝘱𝘳𝘰𝘱𝘳𝘪𝘢𝘵𝘦 𝘭𝘦𝘨𝘢𝘭, 𝘵𝘢𝘹, 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘢𝘯𝘥 𝘰𝘵𝘩𝘦𝘳 𝘱𝘳𝘰𝘧𝘦𝘴𝘴𝘪𝘰𝘯𝘢𝘭 𝘢𝘥𝘷𝘪𝘤𝘦 𝘣𝘦𝘧𝘰𝘳𝘦 𝘺𝘰𝘶 𝘮𝘢𝘬𝘦 𝘢𝘯𝘺 𝘥𝘦𝘤𝘪𝘴𝘪𝘰𝘯 𝘳𝘦𝘨𝘢𝘳𝘥𝘪𝘯𝘨 𝘢𝘯𝘺 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 𝘮𝘦𝘯𝘵𝘪𝘰𝘯𝘦𝘥 𝘪𝘯 𝘵𝘩𝘪𝘴 𝘤𝘰𝘮𝘮𝘶𝘯𝘪𝘤𝘢𝘵𝘪𝘰𝘯, 𝘪𝘵𝘴 𝘸𝘦𝘣𝘴𝘪𝘵𝘦 𝘢𝘯𝘥 𝘵𝘩𝘦 𝘧𝘰𝘭𝘭𝘰𝘸𝘪𝘯𝘨 𝘮𝘢𝘵𝘦𝘳𝘪𝘢𝘭. 𝘞𝘩𝘪𝘭𝘴𝘵 𝘢𝘭𝘭 𝘤𝘢𝘳𝘦 𝘩𝘢𝘴 𝘣𝘦𝘦𝘯 𝘵𝘢𝘬𝘦𝘯 𝘪𝘯 𝘵𝘩𝘦 𝘱𝘳𝘦𝘱𝘢𝘳𝘢𝘵𝘪𝘰𝘯 𝘰𝘧 𝘵𝘩𝘪𝘴 𝘮𝘢𝘵𝘦𝘳𝘪𝘢𝘭, 𝘯𝘰 𝘸𝘢𝘳𝘳𝘢𝘯𝘵𝘺 𝘪𝘴 𝘨𝘪𝘷𝘦𝘯 𝘪𝘯 𝘳𝘦𝘴𝘱𝘦𝘤𝘵 𝘰𝘧 𝘵𝘩𝘦 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯 𝘱𝘳𝘰𝘷𝘪𝘥𝘦𝘥 𝘢𝘯𝘥 𝘢𝘤𝘤𝘰𝘳𝘥𝘪𝘯𝘨𝘭𝘺 𝘯𝘦𝘪𝘵𝘩𝘦𝘳 𝘣 𝘐𝘯𝘷𝘦𝘴𝘵𝘦𝘥 𝘯𝘰𝘳 𝘪𝘵𝘴 𝘳𝘦𝘭𝘢𝘵𝘦𝘥 𝘦𝘯𝘵𝘪𝘵𝘪𝘦𝘴, 𝘳𝘦𝘭𝘢𝘵𝘦𝘥 𝘤𝘰𝘮𝘱𝘢𝘯𝘪𝘦𝘴, 𝘦𝘮𝘱𝘭𝘰𝘺𝘦𝘦𝘴 𝘰𝘳 𝘢𝘨𝘦𝘯𝘵𝘴 𝘴𝘩𝘢𝘭𝘭 𝘣𝘦 𝘭𝘪𝘢𝘣𝘭𝘦 𝘰𝘯 𝘢𝘯𝘺 𝘨𝘳𝘰𝘶𝘯𝘥 𝘸𝘩𝘢𝘵𝘴𝘰𝘦𝘷𝘦𝘳 𝘸𝘪𝘵𝘩 𝘳𝘦𝘴𝘱𝘦𝘤𝘵 𝘵𝘰 𝘥𝘦𝘤𝘪𝘴𝘪𝘰𝘯𝘴 𝘰𝘳 𝘢𝘤𝘵𝘪𝘰𝘯𝘴 𝘵𝘢𝘬𝘦𝘯 𝘢𝘴 𝘢 𝘳𝘦𝘴𝘶𝘭𝘵 𝘰𝘧 𝘺𝘰𝘶 𝘢𝘤𝘵𝘪𝘯𝘨 𝘶𝘱𝘰𝘯 𝘴𝘶𝘤𝘩 𝘪𝘯𝘧𝘰𝘳𝘮𝘢𝘵𝘪𝘰𝘯.