Victorian landlords are being forced to sell their properties or raise rents after land taxes skyrocketed – with one facing a 258 per cent increase in their bill.
Homeowners are being hit with crippling bills after the state government hiked land taxes in 2023 to recoup $1 billion of debt incurred during the Covid pandemic.
Property owners are feeling the brunt as the land tax hike coincides with a series of rate hikes by the Reserve Bank of Australia, which has seen cash rates rise to a 12-year high of 4.35 percent in a bid to stem rising interest rates to tame. inflation.
About 380,000 properties could be liable for the tax after the land value threshold was lowered from $300,000 to $50,000.
A fixed Covid levy was also introduced, fixed for ten years, with a plot of land valued at $50,000 to $100,000 attracting a levy of $500, while land worth more than $100,000 would be subject to a fixed levy of $975 would be imposed.
Victorian landlords plan to sell their properties or raise rents as they face crippling land tax bills
About 380,000 properties could be liable for the tax after the land value threshold dropped from $300,000 to $50,000
Rising interest rates and rising land taxes are a major factor pushing investment property owners to sell their properties.
The number of former rental properties on the real estate market has increased by 30 percent in a year, according to data from real estate analysis company Suburbtrends.
Nearly 12,000 former rental properties were put on the market across the country in the year to January – accounting for 18 per cent of all listings.
Investment property owner Andrew Robertson said his family had been hit by an ‘outrageous’ 258 per cent increase in land tax.
The property, a beach hut in Safety Beach, has been in his wife’s family since the 1940s.
Since 2021, the land tax on the holiday home has increased from €12,000 to no less than €43,000.
‘We inherited it a few years ago and the whole family uses it. We don’t rent it out,” Mr Robertson said The Herald Sun.
‘It’s outrageous. No one can estimate a few hundred percent higher costs within a few years. The irony is that we were the ones in lockdown and now we have to pay for it again.”
One investment property owner said land tax on a family holiday home had risen by a whopping 258 per cent, from $12,000 to $43,000.
Another elderly landlord who owns a property in regional Victoria said he has kept the rent low to help his single tenant, but now has no choice but to raise the rent and possibly evict the tenant for its crippling land tax bill.
In May last year, Victorian Treasurer Tim Pallas presented his ninth state budget, which focused mainly on repairing the national debt.
Three key measures, which started on January 1, resulted in a significant increase in land tax revenues.
The measures included a reduction in the tax-free threshold, the introduction of a fixed duty and an increase in the rate for certain landowners.
The Andrews government explained that the measures – which include the levy, land tax and payroll tax – were “temporary and targeted” and will apply for a period of 10 years until June 30, 2023.