state map of AustraliaState of the States

In the last two months, state and territory governments have handed down their budgets for 2018-19. What do property investors need to know?

Hot on the heels of the Federal Budget, state and territory governments have been hives of activity in May and June, with each one (excluding SA) handing down their proposed budgets for 2018-19.

The latest Federal Budget held little by way of deterrent or incentive for property investors, so many waited with baited breath to see how the states/territories would treat the sector. By and large, the sector was bypassed with few governments announcing measures directly affecting property investment. Some industry pundits have called the budgets lost opportunities, while others have breathed a sigh of relief to find the sector ‘off the radar’.

If adopted, the following measures may impact property investors and the industry.

Victoria (handed down 1 May)

  • Property taxes: No changes to stamp duty etc.
  • Land taxes: No changes to land taxes.
  • Public housing: No provision for increased public housing.
  • Young farmers: For property settlements from 1 July 2018, the young farmer stamp duty exemption threshold will be lifted to $600,000 (from $300,000).
  • ADF first homebuyers: From 1 July 2018, ADF personnel will no longer need to reside in their home for 12 months to obtain the first homebuyer stamp duty exemption.
  • Infrastructure: $13.7 billion investment in infrastructure (2018-19).
  • Health: $1.2 billion for building and expanding hospitals.
  • Education: $2.8 billion investment in schools.

New South Wales (handed down 19 June)

  • Property taxes: No changes to stamp duty etc.
  • First homebuyers: Transfer duty relief and grants will be made available to first homebuyers. The relief would see first homebuyers saving an average of $14,500, with additional benefits being made available to bring those savings up to $34,361.
  • Infrastructure: $15.3 billion investment in infrastructure (2018-19).
  • Health: $8 billion investment in health (2018-19).
  • Education: $6 billion investment in schools over the next four years.

Australian Capital Territory (handed down 5 June)

  • Land taxes: There will be a rate rise with an average increase of seven per cent for houses and 10 per cent for units.
  • Commercial property: From 1 July 2018, transfer duty will be abolished on commercial property transactions of $1.5 million or less. Commercial property transactions greater than $1.5 million will incur a flat five per cent rate.
  • Foreign investors: From 1 July 2018, foreign investors who own residential property in the ACT will be liable for a surcharge of 0.75 per cent of the property’s average unimproved value, in addition to the applicable marginal land tax rate.
  • First homebuyers: From 1 July 2019, first homebuyers with a household income below $160,000 will not pay stamp duty regardless of the value of the first home (established property or newly built home). However, the First Home Owner Grant will end.
  • Housing: $760 million for housing and services over the next four years, plus $775,000 over four years to support innovation in housing choices.
  • Affordable housing: Sites for 288 affordable homes to be released,along with sites for 113 public housing and 20 community housing properties.
  • Capital works: $126 million new capital works expenditure (2018-19).
  • Light rail: $12.5 million to progress Light Rail Stage 2.
  • Health: $1.6 billion investment in health.
  • Education: $1.2 billion investment in schools.

Queensland (handed down 12 June)

  • Property taxes: No changes to stamp duty etc.
  • Land tax: From 1 July 2018, the rate of land tax is increasing by 0.5 per cent for owners of land who have aggregated landholdings with a taxable value above $10 million.
  • Foreign investors: Foreigner acquirer duty to increase to seven per cent from 1 July 2018 (up from three per cent).
  • First homebuyers: First Home Owners’ Grant will reduce to $15,000 (from $20,000).
  • Transport and roads: $4.9 billion investment in transport and roads.
  • Infrastructure: $45.8 billion over the next four years.
  • Health: $17.3 billion investment in health.
  • Education: $14.1 billion towards education and training.

Western Australia (handed down 10 May)

  • Property taxes: No changes to stamp duty, transfer duty rates etc.
  • Foreign investors: From 1 January 2019, foreign investors will pay a seven per cent surcharge on property purchases.
  • Affordable housing: $184 million State contribution to a $394 million Social and Affordable Housing and Jobs Package, aligned to METRONET.
  • Transport infrastructure: $3.6 billion allocated to METRONET projects in total and $3.2 billion for road infrastructure.
  • Health: $655 million of health infrastructure investment over the next four years.
  • Education: $22.2 billion investment in education over the next four years.

Tasmania (handed down 14 June)

  • Land tax: Exemption on paying land tax for three years for all new-build homes for long-term rental and a one year land tax exemption for short-stay accommodation properties that are made available for long-term rental accommodation within the Greater Hobart Area.
  • Foreign investors: Foreign Investor Duty Surcharge introduced which will see an additional three per cent of the dutiable value for all purchases by foreign residents and an additional half per cent of the dutiable value for all purchases of primary production land by foreign investors.
  • First home builders: Extending the First Home Owner Grant of $20,000 for eligible first homebuyers of newly constructed homes, those who have new homes constructed and owner-builders, from 1 July 2018 to 30 June 2019 inclusive.
  • First homebuyers: 50 per cent saving on stamp duty for first homebuyers purchasing established homes worth up to $400,000.
  • Downsizing seniors: 50 per cent saving on stamp duty for eligible pensioners that sell their existing home and downsize to a new home or unit at a lower cost.
  • Affordable housing: $100 million for the Affordable Housing Strategy II.
  • Infrastructure: $1.1 billion investment in roads and bridges infrastructure.
  • Health: $475.6 million investment in health.
  • Education: $192.2 million investment in schools and education.

Northern Territory (handed down 1 May)

  • Land tax: No tax introduced.
  • Vacant land: From 1 July 2019, a derelict building and vacant property levy will apply to unoccupied commercial land in the Darwin CBD, at a rate of one per cent of unimproved capital value for buildings that are 50 per cent or more vacant and two per cent for undeveloped vacant land.
  • Remote housing: $1.1 billion investment in remote housing.
  • Public housing: $61 million for new and upgraded urban public housing.
  • Infrastructure: $1.45 billion investment in infrastructure.
  • Transport infrastructure: $626.4 million investment in roads and transport.
  • Capital works: $1.89 billion investment in the capital works program.
  • Education: $1.23 billion investment in education and training.
  • Health: $1.56 billion investment in health services.

South Australia – due to be handed down 4 September.

Please note: As with the Federal Budget, each state/territory budget is not cast in stone until the proposed measures are passed by parliament.