Queensland’s New Land Tax Laws: What Property Investors Need to Know

STORY UPDATE : The Queensland Premier announced on 30 September 2022 that the new Land Tax legislation will be "put on ice". To date, there is no plan to introduce the land tax changes at any time in the future. This legislation will probably never be rolled out as it required data sharing with all other Australian States and Territories, and no Premiers would agree to share the data.
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 tenants 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 either 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, and for assets in companies and trustees it is $350,000.

Queensland investors will have to report any properties that 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.

For example 'An individual landholder with $599,999 in taxable land in Queensland and $400,000 in New South Wales would pay no land tax for the 2022–23 financial year as the Queensland land holding is under the exception threshold.

'Under the aggregation changes, land tax would be payable in Queensland despite both properties falling under the respective state land tax exemption thresholds. So for each following year, this individual will be paying $2,700 in land tax in Queensland'.

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

You can read more about land tax essentials on the QLD Government Website. Outlined below is an example from this site.

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.

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 are 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 1300 522 828, or send us an email at [email protected].

We look forward to hearing from you!