The 2019 – 2020 Victorian Sate Budget was handed down on Monday 27 May 2019. It contained some tax ‘nasties’ for land owners. Below is a summary of these additional taxes.
- The land transfer duty surcharge on foreign purchasers of residential property will be increased from 7% to 8% for contracts entered into on or after 1 July 2019. Given the broad definition of ‘foreign trust’ great care must be taken when the purchaser of property is a discretionary trust. The terms of the trust deed may need to be amended before the property is purchased to ensure the duty surcharge does not apply.
- The land tax absentee owner surcharge will be increased form 1.5% to 2% from the 2020 land tax year.
- From 1 July 2019 the duty exemption applying to qualifying transactions of corporate reconstructions will be replaced with a duty rate of 10% of the duty otherwise payable.
- The land tax exemption for the principal place of residence will not apply for some properties. From the 2020 land tax year, land in metropolitan Melbourne that is contiguous with a principal place of residence but on a separate title and without a separate residence will no longer be exempt from land tax. This will no doubt lead to titles being consolidated, which in itself will generate more revenue for the state government through the increase of fees payable to the State Revenue Office.
In some good news, from 1 July 2019, a duty concession will be provided to transfers of commercial and industrial properties in regional Victoria. A 10% concession will be provided to for contracts signed from 1 July 2019, increasing by 10% each year to provide a 50% discount from 1 July 2023.
Should you require assistance or advice regarding these proposed changes, please contact Rob Warnock or Patrick Cussen.