Tax-exempt landlords in for a shock under Qld’s new regime

For example, someone who owns land in Queensland with a tax bill income of $745,000 and a property in Victoria worth $1.57 million would have paid $1,950 in Queensland for the 2022–23 financial year. Next year, that tax bill will shoot up to $8,400, based on the total value of their properties.

The duo have already warned that many investors are currently unaware of this coming change and might be in for a nasty shock when the new rules come into play. For one type of investors, the aggregation rules will hit even harder.

Queensland currently has a land tax exemption for properties valued under $600,000. That will still apply; however, property owners who paid no tax on a property worth $599,999 last year but have other properties out of state will now see their bills change drastically.

As Mr Tarrant explained: “An individual landholder with $599,999 in taxable land in Queensland and $400,000 in New South Wales would pay no land tax for the 2022–23 financial year as the Queensland land holding is under the exception threshold. 

“Under the aggregation changes, land tax would be payable in Queensland despite both properties falling under the respective state land tax exemption thresholds. So for each following year, this individual will be paying $2,700 in land tax in Queensland.”

Mr Greco agreed this was certainly a scenario that would play out and would come as a particular shock for investors such as these who have never had a relationship with the land tax office previously and will need to report and pay taxes under the new system, despite their circumstances remaining the same.

The pair opined that these scenarios create a clear disincentive for investors maintaining portfolios in Queensland if they have external holdings, and act as a deterrent for landlords considering buying into the state.

Mr Greco described it bluntly as a “tax grab” motivated by COVID-19 budget deficits and posited that investors would certainly be facing changed financial circumstances if other states follow in Queensland’s footsteps.

“It’s certainly a negative for property investors. And listen, Queensland has pulled the trigger. When will the other states follow suit? A lot of states are suffering from budget deficits. They’ve borrowed heavily, so they’re all screaming for cash. So we understand the predicament that they are facing, but this is counterintuitive, because it’s going to disincentivise people to invest in that state,” Mr Greco said.

Listen to the full conversation here.

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