Land tax bills - a nasty surprise for small investors
11 November 2004
The arrival of the annual land tax bill is always a nasty
surprise for small investors which could discourage additional
people from investing in the property market, the Real Estate
Institute of South Australia Inc. (REISA) said today.
REISA President, Mr Robin Turner, said that the first round of
land tax bills for the year had been posted to individuals over
the past fortnight and many people have already expressed shock
at the rises in their land tax liability.
“Once again there have been increases in land tax and this
causes some people severe financial hardship,” Mr Turner said.
“Many people with more than one property are just 'mum and dad'
investors buying a holiday home for the family to enjoy or a
rental property as an investment and this annual bill really
makes them consider whether or not the long-term benefits are
there.”
Unlike other taxes such as capital gains tax, income tax or the
GST, land tax raises a liability on an unrealised gain. The tax
is owed on paper, with no associated cash flow and this causes
financial hardship, particularly for self-funded retirees and
small investors.
Land tax is a disincentive for investing in the property market
and it is an issue that the State Government needs to consider.
With an ageing population, the State Government should be
encouraging people to plan for their retirement by delivering
policies that support self-funded retirees and small investors
and this includes a fair property taxation system.
Currently in South Australia, land tax is applied to investment
properties exceeding $50,000 in value and land tax bills are
posted to individuals during November, December and January. All
other states, except Tasmania, have substantially greater value
limits for land tax exemption.
“REISA encourages the State Government to inquire into the
long-term financial impact of land tax on investors with just
one additional property, to assess whether land tax acts as a
disincentive to investment,” Mr Turner said.
The State Government has made substantial windfalls on property
taxes over the past few years and land tax collections have been
a contributor to this windfall.
It's time for the Government to consider raising the land tax
exemption limit and to consider concessions for self-funded
retirees and small investors.
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