Property tax review to deepen Qld’s tenancy disputes

Custodian property investment expert James Fitzgerald has warned that the federal government’s introduction of a controversial property tax will have negative implications not just for investors in Queensland, but for investors across Australia.

under the aegis of the state new property tax – which is due to come into effect on January 1, 2023 – Queensland taxable land and other relevant interstate land will be used to calculate the relevant tax bracket a property owner is in.

“Essentially what the Queensland Government plans to do is factor the value of interstate land into its property tax calculations,” Mr Fitzgerald said.

The expert pointed out that the SunshineSun, NSW Sun, VIC The state property tax system would be an exception among its peers, which would deter investors from entering the market in the region. “In all other states, investors only pay property tax on properties they own in the state where they own that property, but that’s all changing in Queensland,” he said. he declares.

Further demonstrating what an oddity Queensland will be in the country, Mr Fitzgerald said most states have a tax exemption threshold so investors are not required to pay property tax on their investment if it is below a certain value.

Currently, the property tax threshold in Queensland is $600,000 for investment properties, and it is based on the value of the land, not the value of the building.

However, the new law would mean the state government will include the value of investment properties that investors own in property tax assessments in the 2023-24 fiscal year.

Citing the example provided by the state’s federal website, Fitzgerald said investors should be prepared for soaring property tax charges when the new law takes effect.

“They give a pre-new regime example of an investor who owns land in Queensland with a rateable value of $745,000 and land in Victoria with a value of $1,565,000.

“They would only be charged $1,950 in property tax because the state government only considered Queensland property,” he said.

But Mr Fitzgerald said those numbers would skyrocket with the new property tax system. Using the same example, he said: “Under the new regime, the total value of the investors’ holding is calculated at $2,310,000 and the owner would have to pay $8,422.37 for the Queensland portion.”

Mr. Fitzgerald criticized the new tax system as a cash grab. “It’s just another way for the government to tax homeowners and investors.”

He added that the changes would only screw up the state’s rental market, which is already struggling with a record rental vacancy rate.

“Unfortunately this will also discourage people from investing in Queensland at a time when the state is going through a rental crisis,” he said.

Mr Fitzgerald said with property owners constantly burdened with taxes, the latest change could be one that breaks the proverbial camel’s back and forces investors to give up their Queensland assets, particularly their rental properties.

“I’m sure some investors will decide to offload their Queensland properties and put their dollars in different states,” he predicted.

“This will mean fewer properties available for rent at a time when vacancy rates are already at historic lows.”

In July, data from Domain showed that Brisbane’s rental vacancy rate was at an all-time high of 0.6%.

The shortage of supply and availability of vacant rentals has driven up asking rents and intensified competition among tenants – a trend that Mr Fitzgerald says will only get worse when the laws come into force.

“Rents have risen by 13.6% in Brisbane over the past 12 months, more than double the rate of inflation,” he concluded.

Mr Fitzgerald’s statement echoes that of the Real Estate Institute of Queensland (REIQ), which has chastised the new tax law in December 2021 as “a slap in the face.

Property tax review to deepen Qld’s tenancy disputes

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Last update: August 17, 2022

Posted: August 18, 2022