This article is from the Australian Property Journal archive
THE NSW government’s changes to the tax-free threshold for holding a property is expected to hit commercial real estate owners and their tenants/businesses severely.
The latest Budget 2024-25 announced plans to move away from land tax indexation inline with rising property prices.
Instead the government will increase the land tax threshold to $1.075 million as previously planned, and it will be frozen at that level going forward.
This applies to both the tax-free threshold and the premium rate threshold.
Treasurer Daniel Mookhey said the changes brings NSW in line with most other Australian states.
Following the changes, South Australia will become the only state to index land tax thresholds. The NSW tax-free threshold will remain around 50% higher than the next nearest state.
Mookhey said the changes will take effect from the 2025 land tax year and will be subject to periodic review.
This measure is expected raise an additional $1.5 billion over the next four years.
The REINSW has criticised the change, CEO Tim McKibbin labelled the change as a “stealth tax grab”.
McKibbin said removing land tax indexation will have severe ramifications for commercial tenancies, particularly for tenants and businesses already doing tough as consumers cut back on spending amidst a cost-of-living crisis.
“Landlords will pass on the additional land tax to the tenant and with businesses already doing it tough, many will find the higher costs too much to bear.
“REINSW has consistently called for property tax reform as a critical part of a coordinated solution to address the housing crisis in NSW. But instead of tax reform, all we get is more tax, and more broken promises,” he added.
