'Top end' property owners will be hit with a hike in taxes and charges to help Victoria pay its way out of debt incurred during the Covid pandemic shutdowns.
Victorian treasurer Tim Pallas made the announcements on 20 May when the State Budget was handed down.
“It’s only fair that those making large profits return a reasonable proportion to the community — this means more Victorians can have the schools, hospitals and support they need and deserve,” Mr Pallas said.
The new measures include:
1 - New windfall gains tax of up to 50% to be applied to planning decisions to rezone land from 1 July 2022. The total value uplift from a rezoning decision will be taxed at 50% for windfalls above $500,000, with the tax phasing in from $100,000.
2 - New stamp duty rate for property transactions with a value above $2 million, increasing stamp duty payable to $110,000 plus 6.5% of the dutiable value in excess of $2 million. Applies to contracts entered into on or after 1 July 2021
3 - The land tax rates for high value landholdings will increase. For taxable landholdings exceeding $1.8 million the land tax rate will rise by 0.25 percentage points, and for taxable landholdings exceeding $3 million the land tax rate will rise by 0.30 percentage points from the 2022 land tax year.
4 - The general land tax threshold will increase from $250,000 to $300,000 in the 2022 land tax year. (The land tax threshold for land held on trust remains unchanged at $25,000.)
KR Peters director Peter Nicolls said the tax increases will inevitably trickle down to buyers.
"The budget announcement will cause property developers to increase their prices to cover their cost of the additional taxes," Mr Nicolls explained.
"This means the end user will need to pay more."
He warned the big losers will be first homebuyers who don't have a property to sell and who haven't benefited from recent prices increases.
Renters will also feel the pinch.
"Investors will need to increase the rent they charge to cover the cost incurred by the increase in taxes."
And he warned what is considered a 'luxury' property today, will seem increasingly normal in years to come.
"The median price in a suburb like Wantirna is $1 million. A lot of houses are selling for $1.4, $1.5 million. In eight to ten years, these properties will be over $2million and attract the new taxes."