Victoria’s State Budget 2023-24 has been announced, introducing a series of changes that could significantly affect the real estate market. As we navigate the fine print of the budget, here’s what it means for you, whether you’re a homeowner, a potential buyer, or a property investor.
Land Transfer Duty: Shift to Annual Property Tax
One of the most substantial changes is the abolition of land transfer duty (commonly known as stamp duty) on commercial and industrial properties. From 1 July 2024, these properties will transition to a new system featuring an annual property tax, payable from 10 years after the transaction. The annual property tax will be 1 per cent of the property’s unimproved land value.
Payroll and Land Tax Surcharge
To help pay off COVID-19 debt, a temporary payroll tax surcharge will be implemented for businesses with national payrolls over $10 million. There will also be a temporary land tax surcharge from the 2024 land tax year for ten years.
Absentee Owner Surcharge
The absentee owner surcharge rate will increase from 2 per cent to 4 per cent, and the minimum threshold for non-trust absentee owners will decrease from $300,000 to $50,000.
Land Tax Exemptions
There will be some expansions in land tax exemptions. The land tax exemption for principal places of residence under construction or renovation will be expanded. New land tax exemptions will be introduced for land protected by a conservation covenant with Trust for Nature and land owned by an immediate family member and used as the home of an individual eligible to be a beneficiary of a special disability trust.
Land Transfer Duty Pensioner Exemption
The land transfer duty pensioner exemption and concession thresholds will be aligned with the thresholds for first home buyers, at $600,000 and $750,000 respectively. The eligibility will be assessed on the total value of the purchase from 1 July 2023.
Payroll Tax-Free Threshold
The payroll tax-free threshold will increase from $700,000 to $900,000 starting from 1 July 2024 and then to $1,000,000 from 1 July 2025. However, the deduction associated with tax-free threshold will begin phasing out for every dollar of wages above $3 million.
Business Insurance Duty and Wagering and Betting Tax Rate
Business insurance duty will be abolished over a 10-year period, with the rate of duty, currently 10 per cent, reduced by 1 percentage point each year starting from 1 July 2024. Additionally, the wagering and betting tax rate will increase from 10 per cent to 15 per cent of net wagering revenue from 1 July 2024.
In summary, the State Budget 2023-24 could have wide-ranging impacts on Victoria’s real estate market. As always, it’s crucial to be informed and understand these changes as they come into effect. At Create Real Estate, we’re committed to helping you navigate these complexities. Visit our website for more information and expert advice on your property needs.