'I would never have invested into Queensland property'

Australian property owners living overseas for more than six months are being slugged thousands of dollars in extra taxes under a measure designed to capture foreigners and "absent" land owners.

In the 2017-18 budget, the government announced a 1.5 per cent land tax surcharge on absentee land taxpayers if the value of their taxable land was $350,000 or higher.

The 1.5 per cent land tax surcharge on absentee land taxpayers was expected to raise $20 million in 2017-18.Credit: Pat Scala

Then treasurer Curtis Pitt said the measure — under the headline "foreign landowners" in his budget speech — would ensure "absentee owners of land are making a fair contribution and it has no direct impact on Queensland residents".

The measure was expected to raise $20 million in 2017-18 and $88.4 million in total over four years.

Tyson Lehn, a self-funded retiree and Australian citizen who has been living in Thailand to save money as the cost of living is cheaper, said the decision had "devastated" the income stream from his rental property at Morningside.

"I am one of the unfortunate people caught totally unaware, already committed to owning an investment property in Queensland before the budget announcement," he said.

"I was unfortunately medically retired and decided after financial advice to use all of my superannuation and other funds from compensation to purchase an investment property in Queensland. From that I could draw a very modest rental income to live off.

"Now I am eating into my reserve savings to make up the shortfall.

"[If I had] the opportunity to know there would have been such punitive taxes, I would never have invested into Queensland property."

Mr Lehn bought the property five months before the budget announcement and was slugged a $1600 absentee surcharge in 2017-18 as part of his $4863 land tax bill — which he said equated to one-third of his net rental income.

He said land values increased each year, meaning that land tax and absentee charges would also increase.

Retiree Tyson Lehn said if had known the budget last year would include the absentee land tax, he would not have invested in Queensland property.

"Rents charged to tenants just cannot possibly increase at the same rate because of the extreme amounts charged," he said.

The budget papers say: "Absentee owners benefit from a high standard of services and infrastructure delivered and maintained by a broad range of taxes. The surcharge will ensure absentee owners of land make a further contribution. This will have no impact on Queensland residents."

But Mr Lehn said he already made a contribution by paying income tax, council and water rates, insurance, property management fees, and letting, advertising and maintenance fees.

"I will be forced to sell at a capital loss," he said.

Property Council of Australia Queensland executive director Chris Mountford said he was concerned Queenslanders living overseas would feel the sting of the absentee tax.

"We're seeing Australians living, working or holidaying overseas being punished for retaining ownership of their intended long-term family home or other local property investments," he said.

"In some circumstances, they are being punished for investing foreign-earned income back into Queensland.

"This isn't a tax on vacant properties, or a tax targeted at foreign owners, it's a tax that is hitting ordinary Queenslanders whose circumstances have seen them spend some time abroad."

There are about 2500 absentees affected by the land tax.

A government spokeswoman said it was Queensland’s longstanding position that absentees were subject to higher rates of land tax to account for the fact they were “generally not subject to the range of taxes used to deliver the high-quality services and infrastructure that ultimately contribute to growth in Queensland property values”.

“These rates apply to people who do not ordinarily reside in Australia, including a person for more than six months ending on June 30, however there are also a number of exemptions for people working overseas,” she said.

The exemptions to the tax include if the person is working for the state or federal government overseas or have been working for their employer in Australia for at least one year before being sent to work for them overseas for a period less than five years.

The Queensland government also rolled out "Robin Hood" taxes in this year's budget, including increasing the 3 per cent transfer duty surcharge applied to foreign buyers of Queensland property to 7 per cent.