Qld Investor Land Tax Explained

  • Qld Investor Land Tax Explained image

You may have heard a bit of a commotion in real estate media lately about a new rule that will see the Qld government tax interstate property investors on the land value of property holdings outside of Qld.

Apparently, the Qld government decided that there were too many folk from down south investing in the sunshine state and enjoying the tax free threshold on their assets there, even though they had a number of properties in other states and could therefore afford to be paying more tax. 

Yes, you heard that correctly…one state government is going to tax you for property all over the country. Imagine if all the states followed suit! You’d end up paying each state where you were invested extra tax…and all for the crime of having a diverse property portfolio. Luckily, no other states have announced they will follow suit…yet.

When does it come into effect?

As it stands, from 1 July 2023, the Qld government will calculate land tax for investors based on the total value of land owned across Australia, rather than just in Qld. 

If you only own investment properties in Qld, there won’t be any change to your tax. But if you also own an investment property in another state, you’ll have to declare that too. You will then be charged additional land tax.

At this stage, this rule looks to be for both residential and commercial land.

A number of b Invested clients have invested in Qld and other states in recent years, so will likely be affected by this.

So, am I paying Qld tax on my NSW property?

No, you are only paying tax on your properties in Qld, but you are paying the same rate on those properties that you would be paying if your whole portfolio was in that state.

For example, say you own an investment property in Qld with land worth $800k and then also $1m worth in NSW, the rate of tax you pay is based on $1.8m in value, but you pay it on the $800k property only.

In that case, instead of paying $500 plus 1 cent for each $1 more than $600,000, and a total rate of $2500; you would pay $4500 plus 1.65 cents for each $1 more than $1,000,000. A total rate of $7867.

Yep, you would need to pay more than three times the amount of tax you currently pay. And imagine trying to come up with an extra $5k plus each year while already finding plenty extra to cover the interest rate rises that are happening! For those with finely balanced portfolios, it could be the difference between positive and negative cashflow.

How will this affect the market?

If investors decide to sell their Qld properties or hold off on buying new ones, this could mean less competition for properties and the chance to get some bargains. 

The other potential effect is that investors seek to turn their existing Qld properties into short term rentals to maximise their returns.

Either of these options would potentially further reduce rental stock in Qld, which would put further upwards pressure on rental prices and may lead to bigger returns for investors, many of whom will already be looking to pass on higher costs to tenants.

If you want to know more about your options or need help processing the information, reach out to b Invested.


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