Queensland’s double tax grab must be repealed before it could potentially implode the state’s rental market, experts at BuyersBuyers warn.
The new land tax rules will see the state include taxable land in relevant interstate land when calculating the tax for Queensland. This means that if those with multiple properties outside Queensland will bear higher tax in the state.
BuyersBuyers co-founder Pete Wargent said when the new rules come into effect by 30 June 2023 next year, many commercial and residential landlords will be forced to either increase rents or sell properties — the latter will only exacerbate the already chronic shortage of rental properties.
“And the biggest pain of all will fall onto renters,” he said.
“After all, landlords can always choose to sell up and invest in another state or territory — renters don’t have that luxury, and there will be catastrophic shortage of available rentals if Queensland experiences a net decline in the number of landlords in the current market conditions.”
Mr Wargent said Queensland is consistently the only state in Australia with a high share of rental stock owned by residents of other states — this could shift if the changes are officially implemented.
In fact, Mr Wargent said many of BuyersBuyers clients have already expressed their desire to sell their properties in Queensland if the new rules are not repealed.
“In some cases, investors own just a single rental unit in Queensland, but because of the extraordinary way in which the land tax is set to be levied they face enormous increases in taxation due to owning property in the southern states,” he said.
To show how much the changes could hurt, Mr Wargent gave an example of an investor owning a property in Queensland with a taxable value of 745,000 and a taxable land value interstate of $1.57m.
With the new tax rules, this particular investor would see their land tax increase by more than 330% from $1,950 to $8,442.
“This is a single cherry-picked example – in reality for many landlords currently under the land tax thresholds will suddenly be slugged with very large tax bills, leaving them no option but to sell,” Mr Wargent said.
“It’s not entirely clear how the state of Queensland plans to enforce the tax given the lack of access to the records of other states, but in this instance, they will have no realistic choice but to sell.”
The situation is likely to become worse once population surges again in Queensland as borders reopen.
BuyersBuyers CEO Doron Peleg said Queensland has been the go-to place for interstate and international buyers and tenants even during the height of the pandemic.
“Queensland’s population actually increased by a very strong 73,700 or 1.4% in 2021, despite the closed international borders,” he said.
“Unfortunately, as the borders now reopen such a policy to reduce the number of rental properties available is going to result in a rental market meltdown, with disastrous consequences for young families and other renters.”
Photo by @Viajero on Pexels.