Queensland’s New ‘Unworkable’ Land Tax May Not Be Such A Bad Thing For Renters
Being a landlord in Queensland could soon be more trouble than it’s worth, thanks to the new land tax that will be implemented beginning June 30 next year.
The new rule only affects property investors who have land in Queensland and interstate. It requires anyone who owns investment properties interstate and in Queensland to pay taxes computed against the total taxable value of their investment land in Queensland and the statutory value of their interstate land.
As an example, an individual investor who owns land in Queensland worth AU$745,000 in taxable value will only be charged $1,950 in land tax before June 30, regardless of the value of their other interstate land. But, when the new rule is implemented, the same individual investor, who also owns interstate land valued at $1,565,000 will now have to pay $8,422 in land tax.
Industry groups say that this change in the state’s land tax is causing property investors to consider selling their property — with some already selling up, or worse, passing on the additional cost to their tenants.
Other experts say that the reform, which the state government has called “prudent,” would rebalance an overheated property market that leans towards investors over owner-occupiers and renters.
Matt Grudnoff, a senior economist at The Australia Institute, said that the aim of the land tax reform is to create less favorable conditions for property investors.
“At the moment in Australia we give enormous tax concessions to people who invest in property,” Grudnoff said. “This has left a distortion in the property market, which has led to overinvestment and higher prices.”
“If the state government taxes that and stops some of that distortion and brings it back to some sort of level playing field between owner-occupiers and investors then it’s only a good thing.”
Grudnoff emphasized that property investors would not be able to pass the entirety of the additional cost to their tenants because there’s a limit to what tenants can afford to pay. It could be a win-win type of situation where landlords are better off selling their property, and tenants get the opportunity to buy a home.
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