To prevent "hoarding without building", Tuesday night's new budget will crack down on homeowners who "circle rather than build" and leave the land vacant.
Tuesday night's budget for the new fiscal year cut taxes on vacant land, one of the few real estate-related measures in the new budget, which is expected to raise the budget line by 50 million yuan.
Under this measure, owners will no longer be able to waive municipal and maintenance fees for vacant land in their tax returns.
This integrity measure will address the problem of inappropriate claims by land owners for deductions (such as interest charges) from taxes, as they have no intention of earning income from these sites.
In an effort to stop this, the federal government will ban owners of vacant land from deducting fees associated with the site when filing taxes, starting in July 2019.
Doing so would curb the widespread practice of hoarding land, which could have been used for housing or other development projects.
In the current tax environment, even if the owner never earns any income from the vacant land, he or she can also declare and deduct all expenses associated with it when paying taxes. They do not build the land in order to wait for future housing prices to rise. You can get a windfall from the sale of land.
This is a measure developers will pay close attention to, according to Kirk Corningham, Australia's executive director at (Urban Development Institute of Australia), the Australian Institute for Urban Development.
"I think one of the key issues is that it applies to land that is looking for development approvals, so landowners may be punished for being too slow to develop," Corningham said.
"We know that it may take seven to 10 years for Sydney to buy a property package, so it is a major concern that if the process is too slow, it will be punished," he said.
Lance Cunningham (Lance Cunningham), head of Australian taxation at Australia's BDO, said the ban on normal tax deductions from empty land holders appeared to prevent them from holding land for a long time.
"I think this is really for real estate developers who own a lot of land because they think they can make better profits in the future." "this measure is an attempt to release some land and land that can be used to build houses," he said.
Under the new tax environment, real estate owners can apply for tax deductions after building properties on land, having been approved for use and renting.
But the measure does not apply to land for business, including primary production.
While some rejected tax deductions, such as borrowing and municipal fees, can be deducted from the capital gains tax after the sale of land, the costs of services such as lawn mowing and pest control cannot be deducted at a later date.
It is estimated that the measure will generate 50 million yuan in revenue to government between 2020-21 and 2021-22.