Tasmania cuts land tax for investors and home owners.

In good news for both Tasmanian investors and owner-occupiers, the Tasmanian government has announced an easing of the land tax thresholds and rates.

The government plans to introduce the following land tax changes:

The tax-free threshold will increase from $49,999 to $99,999
The upper threshold will increase from $400,000 and above to $500,000 and above
The middle threshold’s ($100,000 to $499,999) tax rate will fall from 0.55% to 0.45%

“The changes mean around 70,000 Tasmanians will save on average approximately $800 every year, up to a maximum saving of $1,625 – with close to 12,000 taxpayers no longer needing to pay any land tax at all,” according to Premier Peter Gutwein.

What is land tax?

Land tax is a tax that is assessed not on the value of your entire property (i.e. land plus dwelling) but on the value of the land only.

For people who own two or more properties in Tasmania, land tax is calculated on the combined value of your land holdings.

Why has the Tasmanian government made this land tax cut?

One reason the government is adjusting the land tax thresholds and rates is because of the big increase in property prices.

In the year to February 2022, property prices rose 26.0% in Hobart and 28.9% in regional Tasmania, according to CoreLogic.

Meanwhile, between 2016 and 2021, the median house price jumped by a massive 90.1% in Hobart and 76.7% in regional Tasmania, according to the most recent data from the Australian Bureau of Statistics. By way of comparison, here’s how much median house prices increased in the rest of the country:

Canberra = 65.1%
Brisbane = 48.5%
Melbourne = 47.4%
Adelaide = 44.8%
Sydney = 31.9%
Darwin = 13.0%
Perth = 6.7%

As property prices have increased, owners have been forced to pay more land tax.

Another reason the government is making these land tax changes is to help tenants. As investors have been paying more land tax, they’ve been passing this on to their tenants in the form of higher rents.

Tasmanian rents have significantly increased in recent years. For example, in Hobart, rents rose 6.8% in the year to March and 45.8% in the five years to March, according to SQM Research. Most of that increase has been due to supply and demand pushing up rents, rather than land tax being passed on, but the government figures that land tax relief will provide some benefit to tenants.

Why Tasmanian real estate is in demand

Tasmania is a great place to buy property, whether you’re an investor or an owner-occupier.

Not only have prices and rents been surging, but Tasmania was recently named the best-performing state in the country for the eighth consecutive quarter.

If you buy a Tasmanian property and hold it for the long-term, history suggests you’ll enjoy a strong return on your investment.

Buyers Agents Tasmania can help you buy a quality home at a fair price. To discuss your options, call 0439 639 508, email [email protected] or fill in this online form.

Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.