Property groups reject Victorian government plans to introduce another property tax.
The state government will push for legislation of the proposed windfall gains tax, which is expected to go through the Legislative Council.
Announced as part of the 2021/22 Victorian budget, the new windfall gains tax will ensure that 50% of any land price increase of more than $500,000 from repurposing goes directly into the government’s coffers.
Residential land that includes a home, be it a vacation home or an investment property, is exempt from the tax.
In addition, that new tax will not apply to other appreciations, such as property appreciation over time.
However, the Housing Industry Association (HIA) executive director for Victoria Fiona Nield said the timing for the proposed tax “couldn’t be worse”.
“It will come when homes built using the federal government’s HomeBuilder grant are completed, at the risk that new home construction will most likely fall into disrepair in the coming years, threatening jobs” , she said.
The tax, Ms Nield said, would mean future homebuyers will face rising land costs.
Private landowners will also be affected as this tax will strongly discourage them from selling or developing their land for housing.
Ms Nield said the price of a lot in the growing area of Geelong could potentially increase by as much as $53,000 under the tax.
“We know that over 90% of renters aspire to own their own home, but less than half believe they will achieve this goal,” she said.
“There’s no way you can improve housing affordability by adding new taxes, fees and charges.”
“Bringing new land to market in Victoria takes up to ten years, meaning landowners are already managing the risks, costs and changing legal arrangements that could affect a project,” she said.
Ms Nield said developers who have recently purchased land for housing may not be able to move forward with their projects on time given the setback.
“Security is key — landowners are used to paying federal taxes on property sales, but this windfall tax will unnecessarily complicate Victorian real estate transactions and slow down the housing stock.”
Regional markets are hit hard
Property Council Executive Director for Victoria Danni Hunter said Victoria has just come out of a long lockdown, only to be slapped with a new property tax.
“This is the wrong tax at the wrong time and will hit Victorian families, jobs and investors when we can least afford it,” she said.
Ms Hunter said the real estate, construction, housing and development industries already contribute 59% of the state’s tax revenue and that this new tax will only burden the community more.
“It will also have a significant impact on regional Victoria. We are calling on MPs from all sides to do the right thing and oppose the new tax so that we can continue our important economic recovery and get Victoria moving again,” she said.
Matthew Kandelaars, director of UDIA Victorian, shared the same sentiment about the load affecting regional markets, adding that the load will be equal to at least $250,000 per acre in regional Victoria, compared to just over $100,000 per acre in the United States. Melbourne’s growth corridors.
“There is no justification for hitting regional Victoria with a tax more than double the tax charged in Melbourne. A vote for this tax is a vote to leave regional Victoria behind,” he said.
“It’s the value generated by repurposing that builds homes, creates and sustains jobs, and builds communities. If development stops, the housing supply will dry up and prices will skyrocket.”
Photo by Markus Spiske on Unsplash