Each week, Mansion Global poses a tax question to real estate tax lawyers. Here is this week’s question.
Q. What are the upcoming changes to property taxes in Victoria, Australia?
A. The 2021-2022 budget of the Australian State of Victoria, which includes
introduced a number of property tax changes.
For starters, the general property tax threshold will drop from A $ 250,000 to A $ 300,000 (US $ 215,600) for land not held in trust, according to the budget released in May.
This means that property tax is payable on properties valued at A $ 300,000 and over, which saves homeowners paying taxes on A $ 50,000 of the value of their property. The property tax threshold for property held in trust will remain AU $ 25,000.
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However, owners of high-end residences will have higher property tax rates. Properties over A $ 1.8 million will see their tax rate increase by 0.25%, while those valued at A $ 3 million or more will be charged an additional $ 0. , 3%, according to the Victoria’s State Revenue Office.
Changes to property tax rates in Victoria will begin on January 1, 2022.
A number of changes described in the budget have already entered into force.
As of July 1, buyers pay a land transfer tax, or transfer tax, on properties sold for A $ 2 million or more, according to the tax administration.
“The duties to be paid will increase to A $ 110,000 plus 6.5% of the customs value of more than A $ 2 million,” according to the site.
The budget also highlighted a temporary increase in the eligibility threshold for the concession of out-of-plan rights to A $ 1 million, from A $ 750,000. The benefit “reduces the value of the property for construction or renovation costs occurring on or after the contract date, reducing the amount of duty payable,” according to the state.
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This means that those who buy apartments still under construction pay tax on the price of the residence less construction costs. Thus, a house of 620,000 Australian dollars which will cost 465,000 Australian dollars to finish will pay stamp duty on 155,000 Australian dollars, according to an example given by the state.
Meanwhile, in the city of Melbourne there are also temporary benefits for buyers of newly built homes that can cost up to A $ 1 million.
“A 50% concession is available for new residential properties,” according to the tax administration. “A full exemption is available for new residential properties that have remained unsold for 12 months or more since construction was completed.”
These temporary tax advantages are applicable until June 30, 2022.
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