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Published On: Fri, Nov 24th, 2017

Queensland’s property tax hit means some investors might have to sell

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New property taxes in Queensland – two of which were introduced by the Labor government two days before the state election – have made some owners consider selling out, with one landlord’s land tax bill doubling.

The new taxes are seen as a hit to the private sector – a move which the Labor government can afford to make with of its support coming from the unionized public sector workforce.

But for Queenslanders like Rembert Meyer-Rochow, who spends most of his time working in Singapore, the new taxes could mean more property will come onto the market at a time when there are already concerns about an oversupply in Brisbane.

“The tax department in Queensland has told me that they have received many calls and letters of complaint from similarly affected citizens,” Mr. Meyer-Rochow said.

“They are aware of the concerns, but say that this is a matter for the state treasurer, Curtis Pitt and that they are simply tasked with collecting the revenue.”

Under the state’s absentee owner tax introduced earlier this year, Meyer-Rochow’s tax bill will go from $54,356 to well over $100,000.

“I now have to consider selling some of the property,” he said, “I believe the LNP has a far more-investor friendly philosophy. I am hoping LNP wins the election.

Other property investors are also looking at a tougher environment to work in.

The tax changes include an increase in the existing transfer duty surcharge on foreign buyers of property from 3 percent to 7 percent – the same rate as Victoria.

Major Queensland developer Consolidated Properties was incensed by the new tax.

“It is ludicrous of any level of government to further increase taxes payable by offshore buyers,” Consolidated Properties’ Don O’Rorke said, “We should be actively seeking appropriate offshore investment through positive messaging, not slam dunk, xenophobic taxing!”

Another new land tax category will be introduced covering an estimated 850 large property holdings worth above $10 million at a rate of 2.25 percent for individuals and 2.5 percent for trusts, companies or absentee landholders.

Labor’s new taxes have infuriated some of the big industry leaders including the Australian chief executive of major property firm JLL Stephen Conry.

“More arbitrary government interference on property taxes equals sovereign risk which is ill-advised and a serious concern for Australia’s reputation as an investment destination,” Mr. Conry said.

The Property Council of Australia’s Chris Mountford said the government “was playing a dangerous game by upping taxes on property investors”.

Even tax experts are wary of the changes. Steve Douglas, a fellow of the Taxation Institute of Australia and co-founder and managing director of Australasian Taxation Service said foreign activity was important to maintain a balanced supply in the market.

Originally Published: www.afr.com

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