In what many are saying is a stupid move, the Queensland state government has announced changes to its land tax laws.  The new legislation will mean investors will be charged land tax based on the value of their entire Australian portfolios, regardless of location.  

The new laws come into effect on 1 July 2023 and have broad implications for the country’s property owners, particularly those who might previously have been exempt from some taxes.  

Unfortunately, the key group that will feel the pain will be renters who are already being hit with increasing rents and decreasing supply of rental properties.  The new tax approach will influence some property owners to sell up, and will deter new buyers in the Queensland market. 

Read on to find out more about how the changes will impact you and what you need to do to prepare. 

What action will you need to take? 

From 30 June 2023, you will need to complete a land tax declaration by the earlier of the following: 

  • within 30 days of receiving a land tax assessment notice 
  • on or before 31 October. 

The land tax kicks in for individuals when their rateable land value hits $600,000 or more, while assets in companies and trustees the threshold is $350,000. 

Queensland investors will have to report any properties they own outside of the Sunshine State when doing their state taxes and will now be charged land tax based on the entire value of their portfolio, country-wide. 

On the upside, not everyone who owns property in Queensland will be up for the land tax. There are exemptions for homeowners and for other uses of the land. 

Also, if you hold an investment property and you do not reach the threshold you will remain exempt, but the land tax threshold in Queensland remains very low, meaning many investors will get caught.  Outlined below are threshold tables for individuals and companies or trusts.

Individuals 

Companies and Trusts

See below for a summary and examples and you can read more about land tax essentials on the QLD Government Website

The new regulations 

Qld Government will now seek to assess all properties in your portfolio under the same entity when calculating your land tax bill.  

Calculating land tax with interstate land

The land tax rate that applies depends on what type of owner you are and the value of your land. This rate (and surcharge, if applicable) is applied to the total value of your Australian land. Then this figure is applied to the Queensland portion to get the annual land tax liability.

Example:

On 30 June 2022, Lena owns land in Queensland with a taxable value of $745,000. Her land tax is calculated using the rates for individuals.

Taxable value of land: $745,000

Calculation
= $500 + (1 cent x $145,000)
= $500 + $1,450
= $1,950

We will issue an assessment notice for $1,950 for the 2022-23 financial year.

On 30 June 2023, the value of Lena’s land in Queensland has not changed. But Lena now also owns land in Victoria valued at $1,565,000. The total value of Australian land owned by Lena is $2,310,000, which means the land tax is calculated using a higher rate for individuals.

This is how Lena’s land tax will be calculated:

Taxable value of Australian land: $2,310,000

Calculation
= $4,500 + (1.65 cents x $1,310,000)
= $4,500 + $21,615
= $26,115

This amount is applied to the Queensland portion of Lena’s land (i.e. ($745,000 : $2,310,000) < $26.115)).

We will issue an assessment notice for $8,422.37.

An example below of how this will work has been obtained from the Qld Government Website under Interstate Properties and Land Tax

As of 30 June 2022, Lena will receive a Land Tax bill of $1,950, and only 12 months later that Land Tax bill will now rise to $8,422.37. 

That will of course be in addition to the land tax bill for her Victorian asset! 

In recent years, there have been a number of changes to legislation that have made it harder for investors to profit from the Queensland property market. These include the introduction of stamp duty surcharges on investment properties and changes to negative gearing rules. 

If you are an investor with property in Queensland, it is important to seek professional advice to ensure that you comply with the new laws. Failure to do so could result in significant penalties. 

With all these changes, it’s more important than ever to seek professional advice before buying an investment property in Queensland. A good buyer’s agent will be able to help you navigate the current market and find a property that is likely to offer you good returns in spite of the challenges. 

If you’re thinking of investing in Queensland property, contact the team at The Property Frontline today. We have a wealth of experience helping investors find and purchase properties in the Queensland market, and we can help you too. Call us on 1 300 522 828, or send us an email at support@propertyfrontline.com.au. We look forward to hearing from you! 

About the author

Debra Beck-Mewing is the Editor of the Property Portfolio Magazine and CEO of The Property Frontline.  She has more than 20 years’ experience in property investing Australia-wide and has used a range of strategies to build her property portfolio including renovating, granny flats, sub-division and development. Debra is a skilled property strategist, and a master in sourcing properties that have multiple uses and multiple exit strategies. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. As a passionate advocate for increasing transparency in the property and wealth industries, Debra is a popular speaker on these topics.  She is also an author, podcast host, and participates on numerous committees including the Property Owners’ Association.

Follow us on facebook.com/ThePropertyFrontline for regular updates, or book in for a strategy session to discuss your property questions. 

Disclaimer – This information is of a general nature only and does not constitute professional advice.  We strongly recommend you seek your own professional advice in relation to your particular circumstances. 

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