The recently announced 2024-25 NSW Budget has made headlines due to a dramatic shift from a projected surplus to a $3.6 billion deficit, revealed on Tuesday, June 18th. With the State’s AAA credit rating at risk, the Government is turning to land taxes for quick cash flow, a common and accessible target.
Land Tax Adjustments for Property Investors
Property investors will now face a frozen tax-free threshold on land tax for 2025. The threshold will remain at its 2024 level of $1.075 million and will not increase to account for indexation, despite a robust property market in the State.
Increased Surcharge on Residential Land Purchased by Foreign Persons
The surcharge for foreign investors will see significant increases: the foreign investor purchase duty surcharge will rise from 8% to 9%, and the land tax surcharge will go up from 4% to 5%. These hikes aim to ensure foreign investors contribute more to state revenues, reflecting their participation in the local property market.
Strategic Considerations for Property Investors
These changes will impact both local and foreign property investors, influencing investment decisions and market dynamics in New South Wales. It is recommended that investors review the impact on their individual circumstances.
1. Portfolio Review
Investors should regularly review their cash flow and funding buffer for their property portfolios to ensure financial commitments do not lead to cash flow stress for their families.
2. Rental Review
Consult with real estate agents to monitor market rent movements, as new policies may affect rental property supply and lead investors to pass on the costs.
3. Tax Planning
Engaging with tax professionals to understand the full impact of these changes and explore strategies to optimize tax liabilities will be crucial. We encourage you to contact Chan & Naylor Pymble for expert advice on navigating these changes and optimizing your investment strategy.
Conclusion
With increased spending commitments by the State and Federal governments on social welfare, domestic violence, and green energy, property investors may continue to bear some of these costs. We are committed to working with investors to review and plan their investment strategies, ensuring they adapt to the changing tax climate while contributing to the important causes supported by the Government’s spending agenda.
About Chan & Naylor
Since 1990, Chan & Naylor has partnered with property investors in managing their taxes and building a tax-effective wealth. Choosing Chan & Naylor means you’re not just selecting a service provider; you’re gaining a partner aligned with your financial goals. You’ll have access to a dedicated client manager supported by a team of accountants that specialises in property tax. Contact us today to review your assets.
Disclaimer
This guide serves as general advice and may not account for the unique circumstances of individual readers. For personalised and strategic solutions tailored to your specific situation, we invite you to seek professional advice from Chan & Naylor. Our highly experienced team is dedicated to helping you navigate the complexities of Australian taxation, ensuring that your financial strategies align with the latest regulations. Contact us today to embark on a path of informed and customised tax planning for your property investments.
