Fears over land tax changes to include interstate investors’ holdings outside of Queensland

The state government has been slammed as having ‘absolutely no idea’ over the impact of its land tax changes which critics say will hurt the investment and rental market.

Fears are mounting over what has been labelled a multimillion dollar land tax grab by Palaszczuk government will stop interstate investors from buying in Queensland.

From July 2023 the Queensland government will charge land tax on investment property all over Australia, when it is owned by anyone who also owns a property in Queensland.

However, the property industry fears that as well as harming the investment market it could also worsen the housing rental crisis with the government’s own modelling indicating a potential land tax increase of up to 400 per cent for some investors.

Madsen Property director Ken Madsen said in his 40 plus years in the industry he has “never seen anything like it”.

“I have been starting to get calls for my interstate clients who are saying what’s the hell is going on,” he said.

“Property investors that we want to encourage to invest in Queensland are now going to get penalised for doing so and they will end up staying and investing in their own state.”

Critics say people who have never paid land tax before will soon be hit with bills.

According to the Queensland Government the changes were introduced to close a land tax loophole where interstate investors with a number of properties in different states have had access to tax-free rate thresholds.

The Australian Property Council this week sent out alerts to members about the new tax which in the July Budget estimates the Government said should raise about $20m and impact no more than 10,000 landowners.

However, the Property Council Queensland executive director Jen Williams said when pressed at the estimates the Government had “absolutely no idea” about the total amount of money it will raise.

“They were asked but couldn’t really answer it. There are people who have never paid land tax before and will start getting huge bills. Each circumstance will be different and it will depend on what type of exceptions and other things they put in place,” she said.

“But if you have three properties in NSW and one in Queensland that Queensland property will cost a heck of a lot more in land tax so investors will be asking themselves why would they keep it.”

The land tax changes apply to companies, individuals and trusts and there is a range of exemptions.

There are fears the land tax changes will hurt the already tight rental market.

Shadow treasurer David Janetzki said the tax makes no sense in “theory or practice” and forecast it would hit renters.

“There are 400,000 property investors in Queensland and countless more interstate who invest here. They support housing affordability and accessibility across our community,” he said.

“Industry experts are warning that thousands of property investors are likely to withdraw their rental properties from the pool and that will drive up rents at a time of rental scarcity.”

A spokesman for the Queensland treasurer said the land tax change was announced in December and the legislation to close “this loophole” passed unanimously in parliament in June 2022.

“This sensible, prudent reform means interstate investors get treated the same as Queensland investors, wherever they live and wherever they own property,” he said.

“Currently, interstate investors who own properties across several states can access the tax-free and progressive rate thresholds multiple times, depending how many states they own property in.”

Originally published as Fears over land tax changes to include interstate investors’ holdings outside of Queensland