Holiday homes on land that was bought for as little $400 and have been passed down for generations are attracting eye-watering tax bills that may force families to sell.
The NSW south coast became a white hot property market during the Covid period, stratospherically elevating the prices of modest holiday homes.
This has led to many owners suddenly having to pay land tax for the first time, which is calculated on the site’s worth for a second home in a real estate portfolio valued at more $969,000.
Sharon Deadman, principal owner of the Ray White real estate agency that serves the small towns of Bendalong and Mayana, told Daily Mail Australia she had ‘many, many’ shocked phone calls as property prices increased by up to 300 per cent.
‘Some of them were not aware of what we are selling properties for,’ she said.
‘The last three sales in Bendalong have been more than $2million.’
This two-storey three bed-room house in the NSW south coast town of Bendalong has been listed with an asking price of $2.8million
Property owners in the scenic NSW southern coastal town of Bendalong (pictured) have complained they have been landed with a huge land tax increase
A two-storey three bedroom house in the town is currently listed at an asking price of $2.8million.
Michelle Whitehead, whose family have owned a property in Bendalong since her grandmother won the right to buy it for around $400 in 1960, told Daily Mail Australia she was disputing the projection that her land would increase in value by 62 per cent next year.
This meant her tax bill was going from $7,000 this year, having already jumped from $1,200 in the space of 12 months, to more than $16,000.
‘I’m not objecting to paying tax,’ Ms Whitehead said.
‘What I object to is the methodology to arrive at the valuation and their projection that the land value will increase by 62 per cent next year.
‘I really feel for people who have inherited homes when their mum and dad might have got in the ballot for whatever year it was,’ property agent Ms Deadman added.
‘Their parents have probably worked bloody hard to be able to afford a holiday home because they couldn’t afford to go anywhere else but all that dynamic has changed.’
Land tax is determined on the average value of the site from the current year of the assessment and for the past two years.
NSW south coast properties saw a steep average increase of 38 per cent in value, according to the NSW Valuer General who makes the determinations.
In the annual report on land valuations for 2022, the state’s Valuer General David Parker wrote that working from home arrangements fostered during the Covid pandemic had driven up prices.
Bendalong real estate agent Sharon Deadman says that during the Covid period coastal properties were in such demand they were being sold through direct offers before hitting the internet
‘Regional and coastal markets with accessibility to regional and metropolitan centres were particularly sought after,’ the report said.
The steep increases are being questioned by many property owners as they do not seem to reflect recent sales in the area.
Ms Deadman said the land tax values had been ‘distorted’ by Covid.
‘Maybe three properties have sold here in a year and a half,’ she said.
‘It’s not three properties being sold every month.’
She said that the market went crazy during the pandemic as people were able to work from home, had excess money to spend because of the restrictions on travel and the record low interest rates.
‘During Covid we were listing most of our properties as price by negotiation because we didn’t know what things were going to sell for,’ she said.
‘We had sold three houses before they even hit the internet.
‘This was because there was a mass exodus out of Sydney and Canberra and all the major metropolitan centres.’
Ms Deadman said the first property in Bendalong that sells post the latest land tax valuation, which occurred in July of last year, will be the telltale sign of whether the market could come down.
Although Wayana has a premium strip of water view homes it along with Bendalong catered for people of quite modest means after land was balloted for cheap sale during the late 1950s and 1960s.
‘Dwelling were made from leftovers from this club or that club and from their mate’s house that was being demolished or they moved the house from Sydney so a lot of them were very basic little dwellings,’ Ms Deadman said.
In theory rising land tax should encourage more owners to rent out their properties, which could ease the current critical shortage of such housing but Ms Deadman pointed to a snag with that idea.
‘I can’t take on any more holiday rentals because I don’t have the staff to clean them and the people who would normally be cleaning these houses can’t afford to live here,’ she said.
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