Land Tax Change Plan Hits Property Investors
Queensland’s land tax change plan has caused some problems for property investors. Instead of passing on the costs to renters, investors plan to pass them on to other investors, including small businesses. The problem is that landlords can’t pass the entire increase on to renters, since renters already have a ceiling on how much they can afford. The change will also cause more homeowners, since investors will sell properties.
Property investors affected by change to Queensland’s land tax plan to sell or pass on costs to renters
Property investors in Queensland are facing a land tax hike which could cost them thousands of dollars more than they were paying before. The new policy also requires property investors who own land outside the state to declare that land, as well as its value, is owned by them. If this is the case, the investor will need to pay an additional land tax.
As the cost of living continues to rise, the campaign against the new land tax plan has reached fever pitch. But with a recent survey revealing that 58 per cent of landlords feel that it is a good time to invest in residential property, it is difficult to see why the government would want to impose new costs on property investors. While policymakers treat investors appallingly, many believe that they are an endless source of revenue. According to Pete Wargent, co-founder of the buyers’ agency portal BuyersBuyers, the new land tax rules will force landlords to either sell or pass on costs to renters.
The proposed change will result in a drop in Queensland’s rental stock of up to 162,000 dwellings. The Queensland government is now reconsidering its plans after being criticized by other state and federal governments. However, the change has not yet been formally voted through the national cabinet. It is still expected to go through the National Council of Australian Premiers and state treasurers in the coming weeks.
Property investors affected by change to other investors plan to sell or pass on costs to small businesses
New legislation will make it more difficult for retirees to exchange properties. The change will also make it more difficult for small businesses that rent property to make an exchange. A new rule would charge capital gains tax on profits above the exemption amount of $500,000. This could make an exchange difficult for retirees and other small business owners.
Property investors hit by land tax change plan to sell or pass on costs to investors
The Queensland government has proposed a new land tax that will apply to interstate property holdings as of June 30, 2019. While the state opposition has labelled the plan “unworkable,” experts say it will help rebalance the overheated property market. If passed, the land tax will cost every investor in Queensland about $1950.
Land value taxation has been implemented in many countries, including Estonia, Denmark, Lithuania, Russia, Singapore, Taiwan, and the United States. It has also been introduced in parts of Australia, Mexico, and Pennsylvania. The taxation is a one-time charge and will not affect the rental value, deadweight loss, or quantity transacted.
The value of a parcel of land depends on its present value and the value it can produce over time. The ground rent is a measurement of this value, which is the basis for land prices. The tax will reduce the ground rent and depress land prices. In some cases, the tax will also result in less rent being charged, due to efficiency gains, or speculators selling unused land.