A Novel Idea For Reforming Stamp Duty

Discussion in 'Property Market Economics' started by gty12, 11th Feb, 2019.

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  1. gty12

    gty12 Well-Known Member

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    Dear all,

    Another thread here saw many lament Stamp Duty being too large, arguing it dissuades people from moving house/buying a house/entering the market-an idea on how to fix this:

    I'm going to use imaginary prices & stamp duty rates so the concept remains simple.

    STEP 1:
    • Citizen Jeff buys house to live in in Suburb A for $500,000
    • Pays $15,000 in Stamp Duty
    STEP 2:
    • Buys new house to live in in Suburb B for $1,000,000 10 years later
    • $15,000 Stamp Duty from previous purchase is indexed relative to either inflation, median house price or some other measure
    • Citizen Jeff merely pays the difference between what his stamp duty should be for a $1,000,000 house and this indexed stamp duty=i.e. you carry the stamp duty with you

    Investors pay stamp duty as per normal and are NOT allowed to carry over/index stamp duty from investment purchases.
    People who downsize (e.g. Citizen Jeff buys a $250,000) pay NO Stamp Duty if their indexed stamp duty is higher than normal stamp duty for said property.
    A similar ruling/concept to the 6 year Capital Gains Tax rule (i.e. one can only claim a house as a principal residence for Capital Gains purposes up to six years after moving out) is applied to prevent 'rorting' of the system.
    The measure that is used for the indexing is open for discussion, as is whether it should take into account government adjustments to the normal physical Stamp Duty percentage.

    Thoughts?
    I fear I am going to get roasted by MTR for this thread.
     
    JohnPropChat likes this.
  2. JohnPropChat

    JohnPropChat Well-Known Member

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    So punish investors? When a OO is upgrading they already get generous CGT discounts (100%), what does this serve? They also get to make one-off big contribution into super when they downgrade.
     
  3. Trainee

    Trainee Well-Known Member

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    Doesnt help fhbs. And nothing to replace the revenue, such as a ongoing land/property tax or state capital gains tax.
     
    Last edited: 11th Feb, 2019
  4. Blueskies

    Blueskies Well-Known Member

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    OK this is a fun game, I'll try -

    Eliminate stamp duty
    Eliminate land tax
    Eliminate Capital gains tax
    Reduce corporate tax rate to 15%
    Reduce top tax bracket to 30%

    Then, rebalance budgets by:
    Eliminate state governments and divide powers between federal and local.
    Eliminate tax free thresholds
    Raise lower tax brackets to 30%
    Raise GST to 15% and broaden scope

    Ah well, back to reality...
     
    craigc, Jello_B, PMC Property and 3 others like this.
  5. thatbum

    thatbum Well-Known Member

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    My preference:

    Eliminate stamp duty
    Increase land tax
    Charge land tax on owner occupiers (maybe a scheme for deferred payment for pensioners)
     
    PMC Property likes this.
  6. JohnPropChat

    JohnPropChat Well-Known Member

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    Reduce personal income tax and corporate tax brackets
    Increase GST to 15%
    Increase SGC to 15%

    Stamp duty can stay, only effects people who want to be in the market.
     
  7. Illusivedreams

    Illusivedreams Well-Known Member

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    Reduce Entitlements.
     
    Jello_B likes this.
  8. Someguy

    Someguy Well-Known Member

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    Can see this happening. Land tax would be a far steadier income than stamp duty and could effectively force development once an area is zoned for it as it would become too expensive to hold a zoned block as a single dwelling.
     
  9. gty12

    gty12 Well-Known Member

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    This already happens with commercial property=the reason why there isn't many inner city Melbourne warehouses any more.