The Victoria pre-budget announcement came hot on the heels of the Federal Budget announcement, introducing several updates that would affect landholdings in Victoria.
The budget announcements reveal the following changes which will begin on 1 January 2022:
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Land Tax
The Land Tax rate for taxable landholdings exceeding $1.8 million will increase by 0.25%, and the rate for taxable landholdings exceeding $3 million will increase by 0.30%.
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Stamp Duty
Premium Stamp Duty rates for property transactions with a value above $2 million has been increased to $110,000 plus 6.5 per cent of the dutiable value in excess of $2 million.
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Windfall Gains Tax
Windfall Gains Tax of up to 50% for windfalls above $500,000 will be taxed for Developers and speculators.
Impact of the changes
The biggest impact of the changes would be on developers and investors of property, as they would be charged more tax on acquiring or holding onto property with a high value. Treasurer Tim Pallas emphasises that everyone needs to pay their fair share to support Victoria’s economic recovery, and the budget aimed to make those who has the capacity and making substantial profits to contribute more to society.
The increases in taxes will ultimately raise an estimated $380 million each year to be reinvested into the community, giving schools, hospitals and other community services the support they need.
Although these changes which may slow down property development and divert investments away from Victoria in the recovering Covid-19 economy, the Government is showing their confidence that Victoria is still a highly attractive investment destination even with the increases in taxes.
The changes do not affect residential land and the government is still supportive of local owner occupiers will not be affected by the increases. However, Local Victorians with substantial current landholdings need to be aware if the added taxes will be applicable to them.
- If you have any queries regarding property in Victoria, please do not hesitate to contact us at any time at Vincent.hui@sunlaws.com and 02 9267 4988.
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