Stamp duty and land tax hikes the final straw
The Victorian Government’s planned assault on property owners with stamp duty and land tax increases in the 2021-22 State Budget will hurt self-funded retirees and worsen housing affordability, according to the Real Estate Institute of Victoria (REIV).
REIV president Leah Calnan said Victorian homeowners, buyers and mum and dad investors would be hit with double digit percentage increases in land tax, stamp duty and a new tax on property investment and development.
“The tax hikes will make Victoria a less desirable place to invest, ultimately harming jobs and the economy,” Ms Calnan said.
“The government continues to burden Victorians with increases to property taxes.
“Property already accounts for more than 40 per cent of government revenue and there is not much more capacity for the sector to absorb further tax burden.
“If the Victorian Government is serious about jobs and housing it needs to invest in real estate, not attack it.
“These sledgehammer taxes could cause a flight from property by self-funded retirees, for which property investment is their only form of income.”
The government has announced significant changes including:
A 19 per cent increase in land tax on properties valued at between $1.8 million and $3 million, with the rate to increase from 1.3 to 1.55 per cent
A 13 per cent increase in land tax on properties valued at more than $3 million, with the rate to increase from 2.25 per cent to 2.55 per cent
An 18.2 per cent increase in stamp duty on a property’s value above $2 million, with the value up to $2 million to be taxed at the current rate
A new Windfall Gain Tax, which would apply from July 1, 2022, where 50 per cent of the value of uplift as a result of a rezoning (both local government and state government), as assessed by the Valuer General at the time of the rezoning.
According to REIV chief executive officer Gil King, the tax hike will push home ownership out of reach for many hard-working Victorians, while crippling the retirement plans of countless others.
“This ill-considered announcement shows a fundamental misunderstanding of the real estate market, and the contribution it makes to the economy including its influence on Victoria’s economic recovery post-COVID,” Mr King said.
“At a time when commercial CBD properties are struggling to find tenants, the increased taxes will put an extra burden on commercial real estate, which has already had to grapple with COVID-19 lockdowns throughout 2020.
“The vast majority of state government COVID-19 support was directed to renters, not property owners – these taxes will be the final straw for many.
“It is also highly likely that increased property taxes will flow on as rent increases,” he said.
Representing an overwhelming majority of more than 80 per cent of Victorian real estate agencies, the REIV said it was determined to work with government, the opposition and the crossbench to see that common sense and logic prevails.
Master Builders Victoria (MBV) has also expressed concerns at the news the Victorian Government intends to impose significant property tax increases, which may affect Victorian homeowners, homebuyers and investors.
MBV chief executive officer Rebecca Casson said the increases could be a disincentive to Victorian homeowners and investors, potentially affecting the future pipeline for the building and construction industry.
“We welcome the significant economic recovery measures implement by governments, such as the HomeBuilder scheme, and believe all levels of government need to continue to be cautious with any tax increases which could impact a successful recovery,” Ms Casson said.