Busy six weeks for premium apartment buyers to beat Victoria's stamp duty rise from June 30, 2021
The Victorian Government has revealed there will be stamp duty and land tax increases in its 2021-22 State Budget which the industry fears will worsen housing affordability.
The new measures see an estimated $2.65 billion increase in property taxes over the next four years.
Treasurer Tim Pallas revealed a series of new taxes, including increases in stamp duty for high-end residential property buyers.
Some landlords will be hit with higher land tax in Thursday's state budget.
The new 'premium stamp duty rate' will apply to all sales contracts signed after June 30, 2021, which will ensure many buyers will bring forward their purchasing to within the next six weeks.
The stamp duty measure will raise $761 million by adding a premium in stamp duty payments for property sold at more than $2 million.
Sales over $2 million will be taxed with a stamp duty rate of 6.5 per cent for the value in excess of $2 million, up from the exisiting 5.5 per cent rate, ie a $3 million home purchaser will pay $175,000 up from $167,000, according to The Age who were given the pre-budget drop.
Premium landlords will contribute to the state's land tax revenue which is forecast to rise by more than 10 per cent, or $1.5 billion over four years.
Land tax will increase for all land holdings worth more than $1.8 million from next year, rising by 0.25 percentage points for land worth between $1.8 million and $3 million, and by 0.3 percentage points in excess of $3 million.
Apartment developers have slammed the increase in property taxes as likely to put the sector’s fragile recovery in peril.
But developers face being hit with a new windfall gain tax on some land where rezoning had lifted property values, which could lead to longer term higher apartment and house and land prices in major projects.
Rezoned land will be taxed from next year, netting a forecast $125 million over four years.
Any gains of more than $100,000 will be hit with developers and land speculators who reap windfall gains facing a 50 per cent tax if the gain is worth $500,000 or more.
“These increases show a fundamental lack of understanding,” Urban Development Institute of Australia, Victorian division, chief executive Matthew Kandelaars said.
“With property taxes representing nearly 50c in every dollar of state government revenue, we’d hoped that the days of the government turning out the pockets of homeowners were over,” Mr Kandelaars said.
HIA executive director Fiona Nield said Victoria already had the highest stamp duty rates in the country.
“The activity generated from residential development supports jobs and economic activity and is key to supporting all Victorians as the state recovers from the economic shock of COVID-19,” she said.
There has been the suggestion the impact will be greater in regional Victoria, as some urban growth land in Melbourne may be exempted.
The windfall gain tax could hit landowners helping to grow housing supply.
Nield said "new taxes like these are passed on in higher land prices for all and stamp duty inhibits people from selling properties to allow for new homes to be built - it has direct impact on new housing affordability."
REIV President, Leah Calnan said the tax hikes will make Victoria a less desirable place to invest, ultimately harming jobs and the economy.
“The government continues to burden Victorians with increases to property taxes. Property already accounts for more than 40 per cent of government revenue. There is not much more capacity any one sector to absorb further tax burden,” Ms Calnan said.
“These sledgehammer taxes could cause a flight from property,” she said.
