I am planning to buy a commercial property
What the proposed property tax reform could mean for you.
Opportunities to expand your business when you need to.
Under the proposed changes, if you are looking to purchase a commercial property, you could choose to pay stamp duty and land tax or an annual property tax. The annual property tax combines stamp duty and land tax into one. Commercial property owners would pay a higher rate of property tax than residential property owners.
If you are a business owner, the proposed annual property tax could provide opportunities to grow your business with the freedom to move and expand more frequently. You may also be able to benefit from higher income tax deductions.
After 10 years leasing a small property, Steve is purchasing a warehouse to expand his business. If his business continues to grow at its current rate, he will need to move to an even larger facility in five years. Steve could benefit from higher income tax deductions under an annual property tax.
|2021 Warehouse $2.25 million||Total tax over 5 years|
|Stamp duty and land tax or||$108,755 + Starting at $9,356 p/a||[$108,755 + $50,473*] = $159,228|
|Property tax||Starting at $34,125 p/a||$147,349*|
Total savings over 5 years; $11,879**
To provide the flexibility to move as his business expands, Steve chooses to pay the annual property tax and save $11,879 over five years.
*An (illustrative) estimated growth rate of 3.8% per year has been applied to the property tax and land tax payments.
**An estimated potential benefit from income tax deductions has been incorporated into the calculation.