Broker says outdated system needs to change
While a lot of talk has centred around stamp duty reform in recent months, Kelly Cameron says there is another state-based tax that should be abolished – land tax.
The Brisbane broker and property investor with a portfolio of 28, told MPA that the thresholds for the tax, which only property investors are liable to pay, haven’t been changed in more than 20 years despite property values skyrocketing over this time.
“The values of property are double or triple what they were 20 years ago, so people with multiple properties are getting hammered with land tax at the moment,” she said.
In a heated property market where vacancy rates are close to zero in countless regions, a longstanding supply issue has seen both purchase price and rental value surge over the past six months. Many regional tenants have been forced to live in temporary accommodation due to the impact of the “treechanger” movement pushing rents up.
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The amount of land tax and stamp duty being paid by property investors in Cameron’s home state of Queensland is not only a deterrent for investors to purchase more properties, but it’s also a massive deterrent for landlords to provide affordable housing for people in need.
Cameron gave an example of the cost she is liable to pay each year on just one property. The tenant in this example is a woman who has come out of a relationship in which she had suffered 40 years of domestic abuse. Cameron housed her in a property for less than half the market value of rent. Her plan was to subdivide the land and add another property so that the extra rental income could subside the loss she was carrying. She now must pay more than $13,000 a year in land tax, in addition to more than $20,000 in loan interest and running costs, despite her rental income from the tenant being less than $16,000 a year.
“It’s my choice to help her and I have a passion to help people like that, but the land tax is not right,” said Cameron. “Property values grow, most double every 8-10 years, and they’ve not changed the thresholds. Twenty years ago, an expensive property was $180,000. What can you buy for $180,000 now in Brisbane?”
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She said both land tax and stamp duty should be replaced with a yearly levy for all homeowners, whether investor or owner-occupier, so that investors who are providing genuine accommodation for those who cannot afford to buy their own property don’t have to bear the full brunt.
“We pay rates to our local council for providing services like rubbish collection,” she said. “Why couldn’t everyone who owns a house just pay a flat fee to the government every year as an income stream that goes to the state government to replace the revenue?”
Kate McIntyre is an online writer for Mortgage Professional Australia. She has a wealth of experience as a storyteller and journalist for a range of leading media outlets, particularly in real estate, property investing and finance. She loves uncovering the heart behind every story and aims to inspire others through the artful simplicity of well-written words.Email | LinkedIn
