In December, the State Government released the first draft of a Property Tax Notification for 2016-17, a package of measures aimed at preventing the abuse of property tax exemptions.
The Property Tax Bill, however, has been under review by the Legislative Council and, if passed, would have to be put to a referendum in 2021.
This is the first time in a decade that a Property Bill has been passed through the State Assembly, with the Assembly being the largest body in the State.
The first draft, released in November, outlined that property owners will no longer be able to claim an exemption for an interest or leasehold interest in a property that is in excess of five years old.
This would apply to the properties of all property types, including apartments, condominiums, houses, commercial property, industrial property and commercial buildings.
In addition, property owners would also be able not to claim exemptions for interest-only mortgages, mortgages to businesses, mortgages on homes, commercial real estate and rental property.
The State would be unable to tax any income generated by these properties, which will be exempt from tax.
In the draft, the proposed exemptions are set at five-year maximums, with exemption amounts for certain types of interest-bearing mortgages ranging from 20 per cent to 45 per cent of a property’s value.
The exemption amounts would then be based on the property’s current market value, which can vary from year to year.
The Property Bill was passed in January by the State Legislative Assembly with a majority of 73 in favour and 14 against.
On Monday, Finance Minister and State Senator Mike Wright said that the State would have a “significant” increase in the number of properties that will be subject to a property tax.
“If we continue to have these issues and if we continue with these exemptions that are not working, the Government will need to do something,” he said.
If passed, the Property Tax Amendment Act 2016, which is scheduled to come into effect from July 1, would also change the way that property tax is calculated and the way property is taxed.
The bill would also allow for the collection of property taxes, instead of just the tax paid by the owner, and it would also create a new system for assessing property owners.
The proposed changes to the property tax legislation are being called the ‘Property Tax Alternative’.
According to the Legislative Assembly, property tax will now be based upon the value of the property in the year of the exemption.
This value will be the same for all properties, regardless of age.
The Bill would also extend the time that the tax is due to be paid, to a maximum of 10 years, from the date the property is sold or transferred.
It also states that the property will not be exempt for more than five years if the tax has not been paid in that time.
The State Government would also provide for an additional 3 per cent surcharge to be levied on any property that does not meet the criteria of a value of more than $1 million.
In an email to The Hindu, Ms Sarma, a spokesperson for the State Property and Housing Authority (SPHA), said that there would be no increase in property tax for property that was not currently taxable.
“Property will continue to be assessed at the current rate of 2 per cent.
We have a clear policy that if there is any issue with property, the property owner should contact the property officer,” she said.
“We are committed to supporting property owners to protect their property rights and provide them with the best tax structure for their home.”