Landlord who bought 9 properties in 6 months to benefit from controversial tax change
No matter who wins the next election in Victoria, a change to land tax is coming, with the state treasurer saying on Monday people paying off more than one mortgage are ‘feeling the pressure as much as anyone’.
Australians in one state will face lower property land taxes from next year. The change has been confirmed by the Victorian leader with Premier Ben Carroll saying the Labor government will roll back the higher land tax introduced by his predecessor.
The highly speculated move has been dubbed a “tax retreat” and met with scorn by critics of stamp duty and those who advocate for the benefits of land tax, however. “It’s a bit of a populist move and it’s misguided,” Prosper Australia Executive Director Rayna Fahey told Yahoo Finance.
“We know that land taxes are the most fair and efficient taxes that we have available to us. And every single inquiry, review, investigation that any government has had over the last 30 years into housing and tax has urged for a transition towards land tax, not away.”
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The land tax threshold was significantly lowered in 2023 – cutting the point at which the tax kicked in from $300,000 to $50,000 – by former premier Dan Andrews to raise revenue after a pandemic spending splurge by the state government.
The tax applies to properties which are not the primary residence of the owner, hitting landlords and those with holiday homes as well as commercial land, with the more punitive tax regime originally intended to be in place until 2033.
Melbourne buyers agent and investor Ben Carrington told Yahoo Finance the measure had helped “destroy” capital growth in the state’s housing market, which has seen prices stagnate compared to other parts of the country.
“It really affected both ends of the market,” he said. “But the fundamentals of [investing in] Melbourne and Victoria are extremely strong.”
And he’s been putting in money where his mouth is, with an expectation that a watering down of land tax could be an added tailwind to the city’s property market.
Carrington has personally bought nine properties for his own portfolio in Melbourne since the federal budget soured the national market. The properties – one house, one townhouse, three villas and four units – were all priced under $500,000 and is exactly the segment of the market which would see a direct benefit from the land tax threshold being wound back to a higher level.
“I bought them from $257,000, up to about $485,000 was the most expensive one,” he said. “So I try to stick within that price point.”
He sold properties in Queensland to fund the personal purchases, which is a market he thinks has topped out, and wants to buy about nine more similar properties in Melbourne for a total of around 18.
