Land tax increases & how they may impact you

Many property owners in Noosa and the Sunshine Coast have found their land tax bills increasing over the past few years. In this market update, we explore why.

Who is liable for land tax in Queensland?

If you own land in Queensland valued over $600,000 that is not used as your principal place of residence, you’re likely to be liable for land tax. This includes investment properties, commercial properties, or vacant land. You can also be liable for land tax on your principal place of residence if you have additional dwellings or use your land for business purposes.

The Queensland government calculates the amount of land tax you need to pay based on the ‘unimproved capital value of the land’ - that is, its value without any buildings, structures, or other improvements.

When working this out, the government’s valuers will consider various factors, including the property market, the land’s physical attributes, how the land is being used and any constraints on its use.

The land tax rates, thresholds, and exemptions vary depending on how you own the land (i.e., whether as an individual, corporation, trustee, or absentee), and companies and super funds generally have to pay more land tax than individuals.

The government also calculates your liability based on all the land you own in Queensland. For instance, if you own three properties, each worth $500,000, it will assess you based on a land value of $1,500,000.

How much more land tax do you have to pay?

That depends on factors including how much the value of your land has increased and whether you own it as an individual or through a vehicle such as a company or super fund.

Written by Robbie Neller Director / Sales Agent 0473 577 828

But say you own properties with a combined land value of $2 million that increased in value by 50% so that they’re now worth $3 million. The difference in land tax would be $16,500 ($37,500 v $21,000 as an individual or $45,000 v $29,500 for a company or super fund).

A further potential increase ruled out

If that wasn’t enough, the truth is that this wasn’t the only rise that the Queensland government had initially planned. The Revenue Legislation Amendment Act 2022 was intended to introduce significant changes to land tax in Queensland from 1 July 2023. This included counting a taxpayer's total landholding value in Australia when determining their land tax liability.

However, the government’s plans were abandoned when governments in other jurisdictions refused to comply by sharing property records in their States or territories.

That said, the government also has various land tax exemptions. These include if you live in the property as your main residence, or use it for certain activities such as a sporting club.

You’ll need to claim that exemption - for instance, if you begin living in a holiday home as your main residence. You can find out how to do that via the Queensland Revenue Office website.

Impact on Property Investors and Property Owners with Substantial Assets

Still, the increased land values our area has seen are likely to have a real impact on many people’s budgets.

For example, property owners with multiple properties or properties worth over $4 million could be facing land tax bills upwards of $30,000 per year. This could alter budgets and even result in financial difficulties for those who rely on rental income.

Alternatively, it may mean that some landlords are forced to increase the rent on their homes or holiday lettings - even beyond their already high levels, leading to further issues around housing affordability in our area.

We have had discussions with several property owners who are concerned about the sharp jump we have seen in UCV's.

If you’re likely to be affected, you should seek professional advice now. There will no doubt be cases where families who have held land or homes across several generations may be forced to sell due to affordability. We’ve also seen property owners exploring alternative investment options to diversify their portfolios.