Inner Sydney’s Leichhardt Council is proposing changes to the tax system that would encourage landlords to keep commercial properties tenanted.
Mayor of Leichhardt, Darcy Byrne, said the decision to leave properties empty to make a profit “is draining life out of the streets in the inner west and other suburbs across Sydney.”
Currently, the Mayor said, “Landlords can offset their losses and claim tax deductions through empty properties. It’s an attractive option if their only priority is to make money without contributing to the community.
“Councils are also frustrated by their inability to adapt the rating system to encourage tenancy.
“If we could increase rates for properties that are left empty long term, and decrease rates for those with tenants, suddenly all the deductions and offsets wouldn’t be so appealing.”
Leichhardt Council has developed a four-point plan of feasible changes that could stop some landlords exploiting loopholes in the system and has written to the New South Wales and Federal Governments.
- Proposed points are: Tightening up the Tax Act to make it harder for landlords to profit from intentionally leaving their properties untenanted–this includes provisions in the tax act that allow landlords to offset losses on empty properties against their other business activities–and to claim tax deductions for long term untenanted properties
- Removing the GST on the sale of untenanted properties: removal of this and other deterrents to the sale of empty properties should encourage landlords to sell
- Allowing councils to apply different rates to tenanted and untenanted commercial properties: long term properties should face a rise in rates, whilst the scheme could be neutral by lowering rates for occupied properties
- Removing Stamp Duty on the sale of high street commercial properties: an exemption should be granted on the condition that the property is fully occupied with a certain time (e.g. six months) and remains that way for a defined period (e.g. five years).
Mayor Byrne said Leichhardt Council is working through a range of initiatives to boost main street economies, but is limited in what it can do with recalcitrant landlords.“We know our high streets have been hit by global financial events, online shopping and high vacancy rates.
“At the moment there’s only so much we can do to address those things, but with some practical tweaks to the tax and rating systems, we could do a lot more.”
