The Victorian government has introduced a new temporary land tax surcharge from the 2024 land tax year. This tax is in addition to the existing land tax and will last for 10 years (until 30 June 2033). The proceeds will be used to repay some of the state’s Covid-19 debts of $31.5 billion.
Family homes will be exempt from this surcharge.
The rates are:
- Flat surcharge of $500 for taxable landholdings from $50,000-$100,000
- Flat surcharge of $975 for taxable landholdings from $100,001-$300,000
- Land tax will be increased by 0.10 percentage points for landholdings valued over $300,000
- Land tax will be increased by 0.10 percentage points for landholdings valued over $250,000 if held by a trust
In addition, the Victorian government increased the absentee owner surcharge from 2% to 4%. The minimum threshold for non-trust absentee owners will be decreased from $300,000 to $50,000. The threshold for an absentee trust remains $25,000.
The Property Investment Professionals of Australia and Property Investors Council of Australia estimated that an investor with land holdings worth $1 million would pay an extra $2,000 land tax per year. This tax would increase as the value of the land increases.
Property experts feel the Covid-19 levy may have a detrimental effect on the supply of rental accommodation which is already constrained. Their concerns are:
- Small investors (everyday Victorians) will be driven out of the market because the cost of maintaining a rental property will exceed the benefits
- The tax could be passed onto the tenants, driving up rental inflation
Freya Southwell is a property lawyer and principal of Sutton Laurence King Lawyers.
For expert advice on property and property-related matters contact Sutton Laurence King Lawyers today on 03 9070 9810 or info@slklawyers.com.au for help.