The Queensland government’s ‘tax grab’ could see residential property investors exit the market and put pressure on small businesses, an expert says.
Ray White Commercial Head of Research, Vanessa Rader, said the Income Tax Amendment Act 2022, which will increase the property tax burden for investors, could cause many people to divest from the state.
“For investors who own property across the country, their Queensland property tax burden is now heavier than ever,” Ms Rader said.
“It could conversely see investment assets exit the market as owners seek to restructure their portfolios and protect themselves from these high expenses.
“Furthermore, it will be a major impediment to attracting investment into the state, with buyers favoring other locations where their legal obligations will be less.”
Ms Rader said a lack of rental accommodation on the market and the slow completion of new stock to accommodate population movements meant rent increases were expected to continue to rise due to rising taxes.
Commercial tenants are the ones likely to be negatively impacted by the tax changes, Rader said.
“For many commercial landlords, this property tax change will not represent the same burden as residential investors,” she said.
“With many commercial leases guaranteeing the recovery of property tax expenses as part of their lease (with the exception of commercial leases), tenants will be the losers of the Queensland Government’s tax bite, as small businesses are likely to pay the invoice from their owners.”
Ms Rader noted that this would add additional pressure on businesses that have been impacted by the disruption to trade during COVID-19, who have struggled to change regulations around masks and vaccinations, putting pressure on their customers and workforces. , as well as the small businesses that were born out of the pandemic. by individuals seeking to survive a time when job losses and reduced hours were a feature.
She said the property tax seizure would impact a range of investors but also occupiers.
“Consideration for small businesses that bear property tax obligations for their commercial landlords or residential tenants who have the threat of not finding rental property if rents rise to recoup that new or increased expense has not been done,” she said.
“Certain assets may come to market or investors may revise their ownership structures in response to changes in legislation.
“Others wonder why they should invest in a state where their domestic investment holdings, which have been built up to spread risk and liability, should influence them in calculating a state-based tax.”