If you are lucky enough to be a property owner in today’s economic climate, the land value
of your asset has very much likely increased over recent years. Happy days, right? Maybe
not as much as you think! If you delve a little deeper in the consequences of increased land
values, especially for those interested in developing their property investment portfolio, the
beneficiary gaining the most from these land value increases is the State government.
Land tax is a state tax, calculated on the freehold land you own at midnight on 30 June each
year. The rate that applies depends on the total taxable value of your land, the type of
owner you are, and if any exemptions apply.
Without an exemption, you are liable for land tax if the total taxable value of all your land is
over the threshold.
Current thresholds are:
- $600,000 or more for individuals and trustees of special disability trusts
- $350,000 or more for companies, trustees, and absentees.
If you own multiple properties in Queensland, the total taxable value is calculated by
combining the taxable value of each property.
Queensland land tax thresholds have not changed since 2007. The issue with this stagnation
is that a bracket creep is occurring. The price of living has increased. Property demand and
property prices have increased. The median house price has increased, and in turn, it is
obvious, land values have increased. This means every year an increasing number of
properties are crossing the ‘out of date’ land value threshold and are falling under the land
tax regime. A growing number of taxpayers are now paying land tax, or substantially
increased land tax, adding further cost pressures to the budget of these landowners.
According to the Queensland Revenues Office, in 2022-2023 an increase of more than 23%
of property owners than in 2021-2022 were liable to pay land tax. Figures from
Queensland’s mid-year budget revealed the state government collected $1.73 billion from
land tax in 2022-2023, a 57% increase on 2021-2022. Revenue has been tipped to reach
$2.32 billion by 2024-2025.
With concerns that increasing land taxes will deter investment or be passed on to an already
overstretched renter, the Real Estate Institute of Queensland (REIQ) is pressuring the state
government to increase the threshold in line with the Consumer Price Index (CPI). However,
with Queensland Treasury estimating that the cost of indexing land tax would extend to
more than $200 million in sacrificed revenue each year from 2025-2026, it is unlikely the
state government will be willing to make any voluntarily changes to the current thresholds
anytime soon. Therefore, the list of land taxpayers will continue to grow and likewise rent is
likely to continue to rise.