Victorian landlords are being forced to sell their properties or raise rent after land tax soared, with one facing a 258 per cent rise in his bill.
Homeowners are being hit with crushing bills after the state government raised land taxes in 2023 to recoup $1 billion of debt incurred during the Covid pandemic.
Landlords are feeling the brunt as the land tax increase coincides with a series of interest rate hikes by the Reserve Bank of Australia, which has seen the cash rate rise to a 12-year high from 4.35 percent in an attempt to control the rise. inflation.
Around 380,000 properties could be liable for the tax after the land value threshold was lowered from $300,000 to $50,000.
A flat rate Covid tax was also introduced and fixed for 10 years, where a parcel of land worth between $50,000 and $100,000 would incur a tax of $500, while a piece of land worth over $100,000 would be affected by a flat fee of $975.
Victorian landlords plan to sell their properties or raise rents as they face crippling land tax bills.
Some 380,000 properties could be subject to the tax after the land value threshold was lowered from $300,000 to $50,000.
Rising interest rates and rising land taxes are a major factor prompting investment property owners to sell.
The number of former rental homes listed on the real estate market increased 30 percent in one year, according to data from real estate analysis company Suburbtrends.
In the year to January, almost 12,000 ex-rental properties were put on the market across the country, representing 18 per cent of all listings.
Investment property owner Andrew Robertson said his family has been hit by a “shocking” 258 per cent increase in their land tax bill.
The property, a beach shack located on Safety Beach, has been in his wife’s family since the 1940s.
Since 2021, the property tax on the vacation home has increased from $12,000 to a whopping $43,000.
‘We inherited it a few years ago and the whole family uses it. We don’t rent it,” Mr Robertson said. The Herald of the Sun.
‘It is outrageous. No one can budget for a few hundred percent cost increases in a few years. The irony is that we were the ones who were locked up and now we are paying for it again.”
One investment property owner said the land tax bill on a family holiday home had increased by a whopping 258 per cent, from $12,000 to $43,000.
Another elderly landlord who owns a property in regional Victoria said he kept rents low to help his single mother tenant, but now has no choice but to increase the rent and potentially evict the tenant due to his crippling land tax bill. .
In May last year, Victorian Treasurer Tim Pallas passed his ninth state budget, focused primarily on repairing the public debt.
Three key measures, which began on January 1, resulted in a significant increase in land tax revenue.
Measurements included a reduction in the tax-free threshold, the introduction of a flat rate and an increase in the rate for certain landowners.
The Andrews Government explained that the measures, including the tax, land tax and payroll tax, were “temporary and targeted” and will apply for a period of 10 years until June 30, 2023.