Saving for the property tax.
October 19, 2022 By Tony Madden

States move on property based taxes

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The Queensland Government has backed away from an amendment that would have seen the land tax rate for investment property in Queensland assessed on the value of the investor’s Australia wide land holdings from 1 July 2023, not just the value of their Queensland property.

Queensland backs down on Australia wide land tax assessment

The amendment passed the Queensland Parliament and became law on 30 June 2022. The amendment would see the value of all of the landholder’s Australian investment property assessed, the value of Queensland land tax calculated on taxable Australian wide investments, then apportioned to the Queensland portion of the land. The amendment requires the landholder to declare their interstate landholdings and data from other sources to verify the landholdings. The end result is many investors being tipped into a higher land tax rate.

The Bill states, “The land tax reform is intended to make Queensland’s land tax system fairer by addressing an inequity which can result in a landholder with all of their landholdings in Queensland paying more land tax than a landholder with a similar value of landholdings spread across jurisdictions.”

Following the National Cabinet Meeting on 30 September, Premier Palaszczuk rescinded the reform as it relied on the “goodwill of other states, and if we can't get that additional information, I will put that aside.”

Stamp duty or an annual property tax for NSW first home buyers?

First home buyers purchasing property in NSW of up to $1.5m will have a choice of paying stamp duty or an annual property tax from 16 January 2023.

The annual property tax payments will be based on the land value of the purchased property. The property tax rates for 2022-23 are:

  • $400 plus 0.3% of land value for properties whose owners live in them

  • $1,500 plus 1.1% of land value for investment properties.

Property tax assessments will be issued annually to home buyers who take the annual property tax option. As an example, a first buyer purchasing a $1.2m NSW property with a land tax value of $720,000, could pay stamp duty of $50,875 or opt to pay the annual property tax ($2,560 for 2022-23). The property tax rates will be indexed annually.

Eligible first home buyers who sign a contract of purchase on or after 16 January 2023 will be eligible to opt into the property tax. If the property tax option is selected, first home buyers must move into the property within 12 months of purchase and live in it continuously for at least 6 months.

The annual property tax is only applicable to the purchaser. If the property is sold, the property tax does not apply to subsequent purchasers. For eligibility details, see First Home Buyer Choice on the NSW Government website.

Legislation enabling the property tax is expected before the NSW Parliament this month. If passed, eligible first home buyers who sign a contract of purchase between the passage of the legislation and 15 January 2023 will be eligible to opt into the property tax. These purchasers will pay land stamp duty but will be able to apply for and receive a refund of that duty if they opt into property tax.

 

About Author

Tony Madden

Tony is a director of Trekk and based in our Brisbane office. He works heavily in the advisory space for his clients, focusing on strategic management consulting, mentoring, and resource planning with a driver of making a difference in their businesses and lifestyle. Tony has key strengths in building teams and is an active listener in working to address the pain points in clients' businesses. He had a passion for small business from a young age due to being brought up with a family of business owners. He's worked with larger corporations and not-for-profits, but he's always drawn back to helping and supporting small to medium (SME) businesses. That's why he's a Director of Trekk, because supporting SME is something we are all passionate about here. Outside of work, Tony has an active family with three sons that love sports, music and socialising. He enjoys having a drink and some laughs with mates and working on restoring his old EH Holden. He’s a passionate Eels NRL and Reds Rugby supporter with a love of vintage and muscle cars, 80’s Rock and keen runner (for the mind & body), Tony also has a laugh by 'acting the goat' at any event where he can embarrass his kids.

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