QLD government hit foreign investors with new property tax.
The property industry accused the Queensland government of a blatant cash grab after it decided to impose a 3 per cent charge on foreign purchases of houses and apartments.The extra tax, which follows Victoria’s 7 per cent foreign investor surcharge imposed in April, will scare away foreign investment in south-east Queensland, the property industry said.
The Baird government is preparing to introduce additional property taxes on foreign investors in its budget on June 21.Treasurer Curtis Pitt said the government would extend a first home owner’s grant by $5000 to $20,000 from July 1 in next week’s state budget.
He said the 3 per cent surcharge would add a small amount to the transfer duty already paid by property buyers.
Mutually beneficial investment
But figures provided by the Treasurer’s office showed foreign investors would now have to pay an additional $10,962 on top of the existing $11,214 in transfer duty for a $365,000 house or apartment.
“This will ensure foreign purchasers of residential property, who benefit from government services and infrastructure, make a contribution to their delivery – as local buyers do,” Mr Pitt told the Queensland Media Club in Brisbane on Thursday.
“We welcome mutually beneficial foreign investment. We are confident this surcharge – that does not affect Queenslanders – will also not affect the interest foreign investors have in sharing our state’s economic strengths.”
Property Council of Australia Queensland executive director Chris Mountford said it was a broken promise because the Treasurer emphatically ruled it out in May last year following Victoria’s decision.
“The Treasurer has previously committed to making Queensland the most attractive state for foreign investment, now he is looking to abandon this competitive advantage in the search for more revenue,” Mr Mountford said.“
Injecting this level of uncertainty into the property industry at this point – when the residential construction cycle continues to cool – is reckless.”
Mr Pitt said the new transfer surcharge for foreign investors would raise $15 million a year in its first year in operation and then $25 million a year in future years.The Palaszczuk government will use next Tuesday’s budget to overhaul the first home owner’s grant which was introduced by the former Newman Liberal National Party government in 2012.
Grant reaches plateau
The scheme offers a grant of $15,000 for buyers of their first newly constructed home but its uptake had plateaued in recent years.
The increased grant will be available for those wanting to buy a new home, apartment or townhouse valued at less than $750,000.
“The building industry is a key contributor to economic growth and stimulating economic activity will create new jobs directly and indirectly. Any many people need to get into the housing market,” Mr Pitt said.
“The new $20,000 grant will instil more confidence in our building sector, as well as more jobs, and help more people into home ownership.”
The decision to increase the transfer duty surcharge was universally condemned by property and housing industry groups. It follows recent meetings in Victoria about new taxes which developers say could threaten the viability of their industry.
Real Estate Institute of Queensland chief executive Antonia Mercorella said the new surcharge would almost double the amount of stamp duty for foreign investors.“
This is potentially disastrous news for our apartment market where some estimates have foreign buyers at around 15 to 20 per cent across Brisbane in the new apartment market,” Ms Mercorella said.
Door slammed shut
“He [Mr Pitt] said Queensland was open for business – but today he’s slammed the door shut.”
Housing Industry Association Queensland executive director Warwick Temby said Queensland would lose its competitive advantage over other states if they all introduced similar surcharges.“
We could have attracted more foreign investment into Queensland without introducing the surcharge. It would have been a point of difference with the southern states and I think that’s an opportunity gone begging,” Mr Temby said.
While he welcomed the increase to the first home owner’s grant, Master Builders Association deputy executive director Paul Bidwell said the transfer duty surcharge would impact on foreign investment in south-east Queensland.“
The Treasurer giveth and the Treasurer taketh. We think the increase in first home owner’s grant is a good thing, particularly in regional Queensland where the housing and construction sector is lagging and this will pull forward demand,” Mr Bidwell said.
“But the increase in the stamp duty will have a major impact in south-east Queensland, particularly in the unit market where approvals are going up but there is a lot of nervousness about where that’s heading.”
Opposition treasury spokesman Scott Emerson said the 3 per cent slug on foreign investors could cut jobs in the construction sector, from construction companies to tradies.
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