2021/2022 Victorian budget, overview on how the changes to taxes will affect the property market
The State Government has announced that the Victorian budget for 2021-2022 will include new land tax increases and a new ‘premium stamp duty’ for property transactions above $2 million. The increases will commence from 1 July 2021.
Land Tax
Increases to land tax will be raised for properties worth more than $1.8 million from 1 January 2022. Land tax will increase by 0.25 percent for properties with taxable holdings between $1.8 million and $3 million, increasing the rate to 1.55%, and by 0.30 percent for properties with taxable holdings over $3 million, increasing the rate to 2.55%. The increase in taxes is expected to also impact land prices at all levels.
Stamp Duty
A ‘premium’ stamp duty will be introduced for property transactions above $2 million entered into from 1 July 2021. Transactions above $2 million will attract stamp duty at the rate of 6.5 percent, resulting in a 1 percent increase from the current 5.5 percent currently applicable to all property transactions above $960,000.
(The above does not include any foreign resident stamp duty surcharge)
Windfall Gains Tax
A new windfall gains tax will also be introduced for any rezoning plans expected from 1 July 2022 which will apply to property investors that profit from rezoning of ex-industrial land and new residential estates. The new windfall gains tax that will be applied will be up to 50 percent for windfalls above $500,000.
More information on the above increases will be confirmed by the Government on 20 May 2021 and from 21 May 2021 the new policies will begin the process of being passed as legislation through Parliament.
Please contact a member of our property team, if you have any questions about these changes.
