By MEL MARTIN
CHANGES in land tax regulations announced in Tuesday's State Budget, won't be enough to keep Peter Coulson investing in New South Wales.
"I definitely won't buy anymore property in NSW, even without land tax. I've been looking at Toowoomba in Queensland. It's not worth investing here," Mr Coulson said.
On Tuesday, Treasurer Andrew Refshauge announced the reinstatement of the land tax-free threshold from January 1, 2006, for properties with a land value up to $330,000.
Owners of investment properties above the threshold will pay a land tax of 1.7 per cent plus $100.
The unpopular 2.25 per cent vendor duty will remain in place.
While Mr Coulson, who owns a block of land at Emerald Beach, will be one of the 350,000 people who will no longer pay land tax, the change is not enough.
He pays around $2500 per year in rates and paid $1400 for this year's land tax for a block of around 500 square metres.
"Unfortunately, it's very expensive to invest here. It will be better without land tax, but with land tax and rates together it was a killer.
"And with the market the way it is, with vendor duty, I probably wouldn't get capital gains if I sold it.
"The government is picking it up at both ends. It must be a lot of money. It's a pity they can't put it towards the highway."
NSW Real Estate director Chris Biggs says that while the reintroduction of the threshold provides relief for property investors, it basically reverts back to the 2004 system.
"It's one positive thing to have come out of the budget," Mr Biggs said.
"But the fact that the vendor duty was kept in was a disappointment. In the short term, it provides uncertainty for investors, and some will go interstate. In the longer term, it might reflect on the rental market by resulting in more owner occupiers, instead of investors.
"Investors with a long-term strategy are less concerned, but if you're actively buying and selling, it does cost."
Premier Bob Carr justifies the vendor duty by saying it pays for the first home owner grant, but Mr Biggs says the Government should look at the bigger picture.
"Overall it's had a negative effect, so they're missing out on stamp duty."
And Real Estate Institute of NSW president Rowen Kelly says that in fact no money is required to fund the scheme.
"The Government is merely foregoing a small amount of income from stamp and mortgage duty paid by first home buyers," he said.
The NSW Government said that more than 350,000 people across the State will be relieved entirely of land tax liability, while another 50,000 will pay less, but for those who own an investment property worth more than $428,182 the tax bill will increase.
Home insurance will go up, with stamp duty on policies to increase from five to nine per cent.