Land tax proposal may force more to sell

Century 21 Barossa’s CJ Setlhong said people should source sound advice from their accountant before they make decisions in response to the proposed land tax changes.

Nuriootpa based real estate agent, CJ Setlhong of Century 21 Barossa stressed the importance of discussions with accountants as property owners with a real estate portfolio face potential challenges in a State Government land tax proposal.

The proposal, which is expected to be debated in Parliament later this month, will, according to CJ, effect people who have multiple properties in their investment portfolio.

He said the main issue with the proposal is that it doesn’t give property owners the time to look at ways they can deal with the changes, which, if approved, will come into affect in 2020.

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“It could be finalised by the end of this year and come into effect six months later… it means people wouldn’t have had time to consolidate and that is the problem,” said CJ.

“The Government is looking at revenue raising which will have negative impact on investors.”

CJ has been fortunate to learn more about the proposal from industry leaders.

Under the proposal by the State Government the ‘mum and dad’ investors (92 per cent or 47,800 individuals) and company groups (75 per cent or 7,900) will pay less land tax as a result.

The changes also increase the tax-free threshold from $391,000 to $450,000 and reform aggregation laws consistent with those in NSW and Victoria to reduce incentives for people to create complex legal structures in order to minimise land tax.

CJ said the proposed changes would mean the rental income investment property owners receive will be reduced to about 3.5 per cent rather than 5 per cent.

“It will force a number of people who have investment properties to sell,” said CJ.

“There is high rental demand in the Barossa and if those investors see almost zero return, our shortage of rental properties in Barossa will worsen.”

CJ said those who have homes as a owner/occupier are okay but feared the rental options may well be reduced.

“For any investor I would say to them they need to talk to their accountant for advice…that is a vital step but at the same time look at the options that are possible.

“But at the same time it is still not at the consultation stage, sit back and see what the outcome will be.”

CJ said there are still a lot of buyers in the market.

“If you are intending to sell, get your property ready and out there to sell,” said CJ.

“September has had fewer properties coming onto the market compared to the past years.”

CJ is seeing a mix of people looking to purchase homes with many seeking a three to four bedroom home with two bathrooms on a good size block in the $300,000 to $500,000 price range.

“If the property is priced right and it’s being marketed to the potential buyer the property will go very fast.”