Australian Expats Hit With Extra Tax On Holding Property
Australian expats whom are planning on moving overseas or are already overseas need to be aware of what kind of land tax they might have to pay on a year to year basis. When you go overseas this can have an impact on the thresholds when it comes to calculating the associated land tax on your now investment property previously your main residence.
Land tax is a state tax, calculated on the freehold land you own. Depending on the state in which your property is in, will depend on how much land tax you will pay. As an example, QLD land values are calculated on the 30 June each year for the following financial year. It is a compulsory requirement to pay this land tax and you must be mindful that if you do not the state government will leverage interest charges on this.
In QLD there are two tiers for working out the land tax that will be levied on your property, however, if you are moving overseas and renting out your property the land tax associated with your property will be the absentee land tax, which is a lower threshold than an ordinary resident individual. Expats get hit with an increased levy in comparison to a normal resident and surcharge tax as well. The absentee rates are reflected below.
Not only do the above absentee rates apply for QLD Australian expat property owners but they also get hit with an ‘Absentee Surcharge’ which is equal to the (Taxable value less $349,999) x 1.5%. The threshold is quite low and captures most aussie expats that own property in QLD.
The other states and territories also have land taxes to pay, however QLD is the only state which charges an extra surcharge on top of absentee rates. The below provides a quick summary of when land tax kicks in based on the value of the property.
Australian expats and soon to be expats need to be aware of the land tax implications they can inflict on themselves by being classified by their state as an absentee owner. We’ve seen cases where an individual has forgotten to inform the state government of their new domicile and current absentee status and in doing so it has created a large tax bill with included interest charges.
If you own property it is important you review your circumstances and make sure the state government has your classification down correctly, otherwise you could be in for a nasty surprise.
Disclaimer – the above commentary is general in nature and should not be construed as tax or financial advice. Please consult a licensed Australian expat tax accountant and financial adviser to determine whether the above information is suitable for you.