Victoria has done it. Queensland tried to do it. Now the NSW Government is joining the ‘tax party’ where landlords, holiday homeowners and businesses will be slugged with a $1.5 billion increase in land taxes. This will also be inflationary because those with sought after properties will pass on the higher taxes as higher rents.
This comes as most of us were surprised to learn that times are so tough for many Australians that they think the Albanese Labor Government stinks, which has, incredibly, sweetened their attitude towards Peter Dutton!
More on that later.
Although he didn’t say it last might when we attended his show in Sydney, Seinfeld would once ask: what’s the deal with this NSW land tax grab? Courtesy of the AFR’s John Kehoe, this is it in a nutshell:
- Multiple property owners are being targeted.
- The tax-free threshold for land tax would be frozen at the2024 level of $1.075 million.
- It won’t be indexed annually with property price changes.
- More investment properties, holiday homes and commercial real estate will be captured by land tax.
- Rents will rise as a consequence.
- Some landlords or property owners of second properties will pay more tax.
- Principal places of residence and farms will generally continue to be exempted.
The NSW Government promised not to raise taxes. It’s arguing that freezing the starting point for land tax isn’t “increasing taxes”. But many landowners will be paying more tax! It’s a Clayton’s tax increase — a tax increase when you’re not having a tax increase!
Kehoe explained that for this year “…the tax-free threshold for the unimproved land value liable for the annual NSW tax increased by $106,000, from $969,000 in 2023 to $1.075 million. “The indexation saved property owners up to $1696 for each property. More than 165,000 primary or joint taxpayers were issued with land tax assessments by Revenue NSW in 2023. But as property prices rise, the future freezing of the value thresholds means the tax will apply more broadly and gradually ratchet up to collect an estimated $1.5 billion more over four years.”
Kehoe also pointed out that Victoria’s land tax grab is tipped “to raise $4.74 billion over four years by cutting the tax-free threshold for land tax from $300,000 to $50,000, imposing new yearly flat fees and increasing the rate of tax payable on properties over $300,000 by 0.1 percentage point.”
Property experts say this in part explains why Melbourne house price rises have been petering out compared to other states.
By comparison, Queensland’s land tax value threshold is $600,000 for landlords. This hasn’t changed since 2007 but the government did try to group properties in other states owned by individuals who own property in Queensland, but that stunt failed to become law.
With all this added to the rise in the cost of living, 13 interest rate rises and no rate cut in sight right now, it’s no wonder the SMH wrote yesterday: “Voters have given Opposition Leader Peter Dutton an edge over Prime Minister Anthony Albanese on key measures of personal performance at the same time as they turn against the government on the economy, cutting Labor’s primary vote to 28 per cent.”
Mr Dutton is now the preferred PM with 36% backing him, compared to Mr Albanese’s 35%. And with Labor Governments in power except in Tasmania, state moves like the one’s above, that punish the successful who have accumulated properties could come back to haunt Albo when the next election is held. He needs rate cuts and fast! (For the full story, see https://www.afr.com/property/residential/shock-property-tax-rise-hits-landlords-holiday-homes-20240616-p5jm4y )
