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THE LATEST BUDGET ANNOUNCEMENT – VICTORIANS FACE SPIKE IN LAND TAX AND STAMP DUTY BEGINNING 1 JANUARY 2022

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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:

 

  • 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%.

 

  • 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.

 

  • 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.

THE LATEST BUDGET ANNOUNCEMENT – SUPPORT FOR SINGLE PARENT AUSTRALIANS TO PURCHASE PROPERTY!!

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In the budget announcement on 11 May 2021, the Australian government has introduced new measures to assist Australians to afford the purchase of their property.

 

The new Family Home Guarantee acts similarly to the First Home Loan Deposit Scheme where the government acts as a guarantor to single parents to allow them to purchase a property with as low as a 2% deposit! Successful applicants are also exempt from lenders mortgage insurance which usually applies to borrowers with low deposits. Over the next four years, 10,000 guarantees will be made available for the single parents to apply.

 

Who is eligible?

From 1 July 2021, the Family Home Guarantee for will be available to single parents who meet the following criteria:

  1. Australian Citizen with child dependants;
  2. Annual income of less than $125,000.00;
  3. Owner-occupier of the purchased property; and
  4. Build a new home or purchase existing home.

 

Buyer Beware!

However, applicants will also need to be aware of the following drawbacks:

  1. While being able to afford houses easier, only paying a 2% deposit on the property means that the applicants will be paying interests on a higher amount of mortgage.
  2. At the same time, applicants will need to prove that they will have the financial capabilities to afford the increased amount in order to be successful in their application.

The budget provides only a general outline of the grant, and the exact details of the guarantee may be subject to change when confirmed later on by the government.

Other announcements in the budget includes an increase in First Home Loan Deposit Scheme spots for purchases of new homes by 10,000 spots and maximum super voluntary contributions have been increased from 30000 to 50000.

We look forward to seeing the budget announced by the states to see if there are any further grants or incentive provided by the state governments.

If you have any queries regarding the above or about purchasing property in Australia, please do not hesitate to contact us at Vincent.hui@sunlaws.com or 02 92674988 at any time.