By Philip Webb
Following a whirlwind week for the property industry, we can now start assessing the implications increased stamp duty and land tax hikes will have on individuals, families, and businesses. The Victorian 2021-22 Budget has left many in the industry disgruntled and may deter investors from entering into our property market.
The effects might not be felt for some time yet, but those with a property portfolio should speak with their financial advisor now and factor in additional costs they could soon incur. Residential rental providers already face exorbitant land taxes, so these additional costs could leave a lasting sting.
Eventually, stamp duty and land tax hikes may be passed onto renters or people buying into developments. We anticipate these changes will lead to higher residential and commercial rents.
In the short term, some homebuyers might rush to snap up a property if looking near the $2 million mark to avoid the increase in stamp duty. While the threshold increasing from $750,000 to $1 million for 50 per cent reductions on stamp duty on off-the-plan purchases will further help first-home buyers get into the market. This will also assist developers in moving some stock which may have been sitting on the market for quite some time.
While there were a handful of positives to come from the state budget, disappointingly, these tax hikes are unlikely to be a result of just COVID-19 and the debt we incurred from it. The government has not set an expiry date on these hikes, meaning they are likely here to stay. Ensuring you have a good understanding of how they might impact you is of vital importance.