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How the latest tax cuts in South Australia affect you

Updated: Oct 6, 2018

The 2018-19 South Australian budget was delivered on Wednesday September 3rd and announced new tax cuts and initiatives which will benefit property investors and owner-occupiers.

Property investors will benefit from land tax cuts, a reduced emergency services levy, new renewable home solutions and greater infrastructure investment.

Land Tax Cuts

In the latest budget, the South Australian government has increased the tax-free threshold for all investment properties from $369,000 to $450,000.

What does this mean?

This represents a potential 25% saving for investors who are interested in purchasing land. This increase only applies to the land value and not the total property value (land and house).

Additionally, $96 million in land tax cuts will be shared by more than 50,000 investors when the government reduces the rate of land tax from 3.7 per cent to 2.9 per cent from July 1, 2020 for properties valued between $1.2 million and $5 million.

The South Australian government has demonstrated its interest in maintaining a strong property market, whilst other states have experienced year-on-year price declines, the South Australian property market still represents a competitive choice for property investment (up 1% compared to last year).

Emergency Services Levy Reduction

Emergency Service Levy is the tax a home owner pays depending on the value of the land. The levy supports the provision of emergency services in South Australian and applies to all fixed property.

What does this mean?

Reduction in the Emergency Services Levy means that the average household will save $145 per year, total annual savings for households combined are estimated to be ~$90 million for the 2019 financial year.

$100 million for renewable energy home solutions

Efforts by the South Australian government to support renewable energy investment (including the 100-megawatt Tesla lithium ion battery) have continued with the announcement of $100 million in grants announced for over 40,000 homes. These grants represent a segment of a wider renewable energy storage scheme ($184 million) that aims to deliver efficient battery storage systems into South Australian homes.

What does this mean?

Home owners will benefit from grants for renewable energy home solutions which will reduce energy bills.

Infrastructure investment

Suburbs and regions around Adelaide will benefit from an allocation of $11.3 billion to infrastructure spending. In the latest budget, the government announced $2.3 billion will be spent on roads, $1.3 billion for education facilities, $1 billion for public transport, $854 million for health facilities, among many additional projects.

The budget is positive news for the South Australian property market, for both investors and home owners. The increase in infrastructure investment are expected to increase and further maintain the current momentum of the property market, representing a fantastic opportunity for investment.

To learn more about this, please contact the team at Property Investment Coaching. We specialise in helping investors through the process of diversification and building their wealth through property investment.

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