On the eve of the 2024-25 Victorian State Budget, now is the perfect opportunity for the Allan Labor Government to align its housing objectives with its taxation policies. Genuine policies designed to retain and grow investment in our state’s property sector will be critical to help ensure the state reaches its ambitious housing target. The Real Estate Institute of Victoria’s (REIV) 2024-25 Victorian State Budget submission outlines three key recommendations for making this happen.

The Parliamentary Inquiry into Land Transfer Duty Fees seeks to investigate issues around land transfer duties including potential transitioning to alternative taxation forms. This submission utilises extant research and draws upon the experience and expertise of industry members.

Whilst the REIV is supportive of measures to transition away from stamp duty on commercial and industrial property transactions as a step towards the abolishment of all land transfer duties,  the government’s proposed bill is overly complex in its implementation design and it essentially replaces stamp duty with another annual property tax which may be more expensive for some owners in the long term The REIV anticipates acute uncertainty in the market if the bill is legislated in its current form.

Given the extensive transitional period for the taxation settings to take place, it is challenging to gauge what the market response will be once it takes effect from the 1^st of July 2024. This unpredictability could extend the transition to the proposed tax indefinitely. Moreover, an inherent risk is that the replacement of the upfront stamp duty tax with an ongoing commercial and industrial property tax could prospectively increase the overall tax burden on business owners.