For some people, having your property valued at double or triple what you’re told it’s worth could be a catalyst to sell.<\/p>\n
But for Emmaly and David Gridley, all that valuation represented was a hefty bill \u2014 and it happened twice.<\/p>\n
Their Moe property \u2014 which doesn’t have power or running water \u2014 was valued at $2.3 million this year by Victoria’s valuer-general. They got a land tax bill of $32,710.<\/p>\n
The year prior, the property was valued at $1.6 million, and the couple received a land tax bill of $20,760.<\/p>\n
The property is more than 100 kilometres east of Melbourne and was purchased for $440,000 in 2020.<\/p>\n
Mr Gridley said when he first received the $1.6 million valuation, he was excited.<\/p>\n
<\/p>\n
The Gridleys’ overvalued property in Moe. (ABC News)<\/p>\n
“Initially, I was like, OK, you’ve got a windfall there,” Mr Gridley told 7.30.<\/p>\n
Then reality set in as he realised a mistake had been made.<\/p>\n
“We couldn’t work out what decided that price; there was no clear indication as to how they came up with that,” he said.<\/p>\n
The Gridleys run a small towing company. They use part of their Moore Street property’s 3.6 hectares to store cars.<\/p>\n
The rest of the property is grassland. It is one of several they own.<\/p>\n
“At the moment, it’s probably worth more money for hay than anything,” Ms Gridley said.<\/p>\n
That is part of the reason the couple were so stunned, but also challenged both valuations.<\/p>\n
<\/p>\n
The Victorian government has increased land taxes across the state. (ABC News: Simon Leo Brown)<\/p>\n
In both cases, the objections filed to Victoria’s valuer-general were successful.<\/p>\n
“We had an independent assessor contact us that had been contacted from State Revenue to assess the land,” Ms Gridley said.<\/p>\n
“He was shaking his head right from the start and then he came back to us and said he’s going to submit that the valuation should now be $770,000.”<\/p>\n
Victoria’s valuer-general declined an interview with 7.30.<\/p>\n
When asked why the Gridleys’ property was overvalued, the valuer-general’s office explained via a statement: “The 2023 and 2024 site value assessments were made using incorrect planning information, which resulted in higher valuations for the returned years.”<\/p>\n
A state in debt, crushing businesses<\/p>\n
The state government increased property taxes to help pay down its debts. (AAP: James Ross)<\/p>\n
The Gridleys are not the only ones suffering as the Victorian government looks to pay its debts.<\/p>\n
The state has the biggest debt burden in Australia, and it’s expected to balloon out to $194 billion in four years’ time, according to this year’s budget papers.<\/p>\n
To claw back money spent during COVID, the state government announced a range of increased and expanded taxes in 2023, including land taxes and payroll taxes.<\/p>\n
Those land taxes are now also taking a toll on businesses.<\/p>\n
Matthew Fogarty and his son, Alex, run a sheet metal company that produces duct piping in Melbourne’s south-east suburb of Dandenong.<\/p>\n
Mr Fogarty bought the business from the Cook family, which founded the company in the 1970s.<\/p>\n
<\/p>\n
Matthew Fogarty and his son Alex are unsure what the future holds for their sheet metal business. (ABC News: Nicholas O’Ferrall)<\/p>\n
He rents three factories on Dingley Avenue from Ray Cook \u2014 but he fears the rise in the bills will force Mr Cook to sell.<\/p>\n
Mr Cook owns multiple properties across Victoria. This year, he was hit with a $55,851 land tax bill and has told Mr Fogarty he can no longer afford to keep the Dandenong factory.\u00a0<\/p>\n
“He’s effectively forced to sell the properties, which would mean for us that we’re basically out on the street,” he said.<\/p>\n
Mr Fogarty says he cannot afford to buy the properties from Mr Cook, and he is deciding whether to move further out of Melbourne, downsize, or sell the business altogether.<\/p>\n
“Frankly, it’s pretty cut-throat at the moment,” he told 7.30.<\/p>\n
“For us, it’s really a strategic question. Does this property at this size suit us? Should we still be in this business? Is it still viable? We’re really looking at those fundamental questions.”<\/p>\n
Victoria’s increased and expanded taxes<\/p>\n
In 2023, the valuer-general also became the sole authority for land valuation across Victoria, a role that was previously carried out by councils.<\/p>\n
“They’ve been a lot more aggressive in terms of the value accorded for different properties in Victoria,” tax lawyer Thomas Abraham told 7.30.<\/p>\n
“What I found recently is that there’s just been a lot more investigations, much more than before, into areas where previously it wouldn’t be a risky area, such as charities or farmers, and a lot of them are now being pursued for land tax exemptions.”<\/p>\n
<\/p>\n
Tax lawyer Thomas Abraham says some of his clients are very concerned about growing land values and taxes. (ABC News: Patrick Rocca)<\/p>\n
Mr Abraham, who specialises in tax law and litigation, says his clients have raised serious concerns about their land valuations.<\/p>\n
“I’ve seen clients who’ve paid for properties on the open market at a public auction a lot less, millions of dollars less, than what the site value is for that particular property,” he said.<\/p>\n
He says the most significant tax change in Victoria has been to Vacant Residential Land Tax, which is charged to owners of second properties.<\/p>\n
<\/p>\n
Holiday homes in Victoria are now also subject to higher taxes. (ABC News: Steven Schubert)<\/p>\n
“As of this year, that has increased to the whole of Victoria. So places in holiday areas which weren’t caught before, Mornington Peninsula, down the Bellarine coast, a lot of those places [are] being caught in [the] mix,” Mr Abraham said.<\/p>\n
Home owners must prove that they have used their holiday home for four weeks a year to receive a reduced tax bill.<\/p>\n
“That’s where the difficulty arises with a lot of tax disputes,” Mr Abraham said.<\/p>\n
“Unless you’re able to provide enough proof and evidence, the commissioner can just say, well, we don’t believe you, you’re not eligible.”<\/p>\n
The other major change is the Victorian government’s decision to double the absentee owner land tax surcharge from 2 per cent to 4 per cent, which affects foreign-based companies.<\/p>\n
“You’re looking at hundreds of thousands [of dollars] a year over the course of two, three years,” Mr Abraham said.<\/p>\n
“I know of some clients that I’m helping with [surcharges of] over a million dollars or more.”<\/p>\n
Hey says many of his international clients, who run large companies in Victoria, are considering moving out of the state.<\/p>\n
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