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Beware if you own property in Queensland. Land tax set to skyrocket.

Queensland’s divisive multi-jurisdictional land tax is set to roll out from the 30th June 2023, despite concerns that the change will see a mass exodus of investors from Queensland’s property market, and potentially increase the financial burden on renters. Presently, Queensland’s land tax is calculated based on the total sum of the taxable value of all freehold land owned in Queensland as of the 30th of June, with an exemption in place for your home. To be taxable, the sum value of the land held must exceed the tax-free threshold, being $600K for individuals and $350k for companies, trustees, and absentee owners as of the time of writing.

The proposed change will mean that rather than calculating land tax based only on the sum value of Queensland land owned, Queensland land tax will be calculated based on the total value of all Australian land owned.  That total value will influence what rate is applied to the proportional taxable value of the Queensland land. For example, let’s say you are an individual who owns a $550,000 investment property in Queensland, and a $300,000 investment property in Victoria. Presently, the Queensland property would fall under the tax-free threshold for land tax, meaning you would owe $0. However, once the change rolls out, the total taxable value of your property will be $850,000, or the sum value of your Queensland and Victorian properties combined. The total sum of your landholdings is now over the tax-free threshold. The total tax owing is then scaled down to the Queensland proportion of the land value. In short, rather than owing $0 in land tax, you will now owe $1,941.15 in land tax to the Queensland government, all because you own land outside of the Queensland state.

Absentee owners (those living outside of Australia) can expect an even harsher blow. Using the same values described above, an absentee owner would presently be out of pocket $8,850.00 in land tax for just the value of their Queensland property. However, once the Victorian property is included in the sum value assessment, this amount skyrockets to an eye watering $16,438.20.

The unprecedented tax will have significant financial ramifications for investors with landholdings around Australia. Likewise, there are fears that the tax will increase the burden on renters with the prospect that landlords would have no choice but to pass on the bill to their tenants. Some have challenged the constitutional validity of the proposed change, including NSW finance minister Damien Tudehope.

You can learn more about the multi-jurisdictional tax here, or click here to visit the QLD land tax calculator and see how your interstate properties may affect tax obligations.

 

Nothing in this article is intended to be construed as financial advice and should not be taken as such. The figures cited are for illustrative purposes only and the accuracy of the same should not be relied upon.

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