Queensland land tax changes and how this affects your investments

Antony Cohen Co-Founder – LongView

The Queensland Government recently made changes to the way in which land tax is calculated. 

 

Key Points 

• From 1 July 2023 Queensland land tax will be calculated using all Australian taxable holdings, not just Queensland ones, to calculate applicable land tax 

 

• This means that if you hold properties in Queensland and in one or more other states the land tax on your Queensland holding is likely to increase 

 

• It becomes even more important to carefully consider the legal structures through which you invest in property as there may be a significant difference in the net result of your property investment depending on how your ownership is structured 

 

The new approach is as follows: 

      1. Calculate the total value of all Australian taxable land holdings 

      2. Calculate the Queensland land tax that would apply if all these land holdings were in Queensland 

      3. Multiply the answer from the second step by the ratio of Queensland land holdings to the total value of Australian land calculated in step 1. 

 

As land tax is calculated on a progressive scale (i.e., the rate increases at various points as the value of land held increases) the impact for many investors who hold, or may in the future hold, properties in multiple states including Queensland is to increase the amount of land tax payable on the Queensland properties. 

One of the strategies up to now to reduce land tax has been to invest in multiple states as the holdings in any one state did not affect the land tax applied elsewhere. So, with each state having progressive land tax scales there was a significant land tax cost benefit available by diversifying across states.  

It would be prudent for investors to assume that other state governments might follow suit with similar changes to land tax calculations in the future. 

 

As we know, the determinants of successful property investment include: 

• Most importantly, buying the right property; 
• Financing well; 
• Structuring well; and 
• Managing well. 

 

These Queensland land tax changes, and the potential for other states to follow Queensland, increase the importance of structuring well. If you are thinking of changing or growing your portfolio, we are here to help.  

 

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