2023-2024 State Budget Recap
The 2023-2024 State Budget has been announced and many will say that it has packed a punch – especially if you are a property investor! Here is a re-cap of the changes that are being proposed to be implemented by the SRO (obviously subject to legislation being passed)
Acquisitions of Commercial and Industrial Properties
From 1 July 2024, Land transfer duty (stamp duty) on commercial and industrial properties will be abolished and replaced with an annual property tax.
From 1 July 2024, commercial and industrial properties will transition to the new system as they are sold, with the annual property tax to be payable from 10 years after the transaction. For example, it is proposed that if a contract is entered to purchase a commercial or industrial property after 1 July 2024 and it is due to settle on 30 September 2024, stamp duty will not be payable on the transfer and the new property tax will be payable annually from the 2035 Land Tax Assessment year.
The annual property tax for commercial and industrial property will be 1 per cent of the property’s unimproved land value.
COVID-19 debt — temporary land tax surcharge
A new COVID-19 debt temporary land tax surcharge will apply to all properties (unless they are exempt; see below) in addition to existing land tax from the 2024 land tax year for ten years.
Exempt properties — including your home (primary place of residence)— will remain exempt from this surcharge. This means the value of exempt property will not be included in assessing the total value of your landholdings for the purposes of assessing land tax .
The new land tax surcharge will be applied as follows:
General land tax rates
- For taxable landholdings between $50,000 and $100,000 — a $500 flat surcharge will apply
- For taxable landholdings between $100,000 and $300,000 — a $975 flat surcharge will apply
- For taxable landholdings over $300,000:
- a $975 flat surcharge
- an increased rate of land tax by 0.10 percentage points.
Trust surcharge land tax rates
- For taxable landholdings between $50,000 and $100,000 — a $500 flat surcharge will apply
- For taxable landholdings between $100,000 and $250,000 — a $975 flat surcharge will apply
- For taxable landholdings over $250,000:
- a $975 flat surcharge
- an increased rate of land tax by 0.10 percentage points.
What landowners should be now aware of is that from 1 January 2024, any land owned that was previously under the landowner threshold of $300,000.00, will now become liable for land tax as set out above. Owners should be aware that even car spaces that have a site value of over $50,000.00 will now fall under this new land tax surcharge.
Other notable changes are as follows
From 1 January 2024:
- The absentee owner surcharge rate will increase from 2 per cent to 4 per cent and the minimum threshold for non-trust absentee owners will decrease from $300,000 to $50,000.
- The land tax exemption for principal places of residence under construction or renovation will be expanded to provide the Commissioner of State Revenue with discretion to extend periods by two years if builder goes into liquidation.
- A new land tax exemption will apply to land owned by an immediate family member and used as the home of an individual eligible to be a beneficiary of a special disability Trust, including where a special disability trust has not been established.
From 1 January 2023:
- A new land transfer duty concession will apply for the transfer of a home valued up to $1.5 million by an immediate family member to an individual eligible to be a beneficiary of a special disability trust.
- For contracts entered into post 1 July 2023, the land transfer duty pensioner exemption and concession thresholds will be aligned with the thresholds for first home buyers, at $600,000 and $750,000 respectively. In addition, eligibility will be assessed on the total value of the purchase.
If you require any specific advice on land tax or other changes for property taxes please contact our property team.
