Increased Queensland Land Valuation Notices – Happy Days! …Or Not.
How great to receive a piece of paper from the Department of Natural Resources telling you that the unimproved value of your land has increased. Even better if it says that from 1 October 2016 to 1 October 2018 the value has leapt by a massive 50.5%, as with the example I am looking at for an industrial block, or that the value of your residential block has powered up by 43% over the same two year period. I must be a genius property investor soon for retirement on the strength of my property investing skills. Once the euphoria settles down, what does it mean to me and is there a sinister plot unfolding? As it so happens this very official document issued “in accordance with the Land Valuation Act” actually dictates what I pay in Rates and Land Tax. If you haven’t had any exposure to Land Tax better keep it on your radar because state and territory governments seem to be increasingly relying on it. Oh what a relief, Land Tax is calculated on a three year moving average so let’s see, the 2019 Land Tax assessment on the industrial land above assessed on “progressive” rates only goes up by 37%. Gee that not so bad given I’m so much wealthier now. But wait there’s more! Unless the valuation goes down the friendly rolling average locks me in for Land Tax increases over the following two years of 27% and 21%. You may breathe a sigh of relief thinking not me mate, my property is below the exemption threshold (which I see hasn’t gone up by 50.5% … or at all for many years for that matter). Well, be ready for a shock if it does. Annual Land Tax for a company, trust, or absentee moving from $349,999 to $350,000 goes from nil straight to $1,450. The bonus if you are an absentee owner is you get to pay an additional surcharge of 1.5% on the amount above $349,999. Non-absentee individuals also get a little surprise when their total land value excluding their residence creeps above $599,999. A $1 increase from there will cost you $500 in annual Land Tax. As mentioned, your main residence is exempt from land tax..for now. Thought you dodged a bullet? The Brisbane City Council also use three year averages of your fantastic Department of Natural Resources valuation to calculate their property Rates. Not to worry, I can lodge an objection against my excessive land valuation with the department by 7th May 2019 and all my problems will be solved. But hang on do I really want to reduce the value of my land on paper for everyone to see including potential buyers? What will the bank who is lending me all that money do if I’m successful? The unfortunate reality is that the basis of Valuer General valuations over the years has changed from being mega conservative to more recently approaching the true likely sale value of the land.Too bad that Land Tax and Rates are assessed without regard for changes in valuation methodology. Good luck objecting on the basis of how much your Rates and Land Tax have increased. Sorry mate you’ll have to take that up with some other department.