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Change Stamps to broad Land Tax

Discussion in 'Accounting & Tax' started by headsonbeds, 19th Nov, 2015.

  1. headsonbeds

    headsonbeds Well-Known Member

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    There has been some talk about changing stamp duty to a broad based land tax.

    Just wondering if anyone has any insite into this. What might they use as the land tax rate. Would investors pay more?

    Would it be grandfathered?

    Sounds like it would benefit short holds.

    Are people supportive. Devil in the detail aside.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You can bet investors would pay more/
     
  3. JacM

    JacM VIC Buyer's Agent Business Member

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    I must say I hate to take the negative approach, but the overall purpose will be to generate more money for the government, not less money. Stamp duty you pay once on entry to the property. Land tax you pay every single year. Based on a valuation decided upon by the council. In other words it goes up at a rate the government sees fit. In other words, overall you'll pay a heck of a lot more irrespective of whether your a homebuyer or investor.

    If they decide first homebuyers need a hand onto the ladder, you can bet that firstly in the long run, those first homebuyers will pay more, but secondly, in the interim, the "float money" will come from investors.
     
  4. wogitalia

    wogitalia Well-Known Member

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    Disagree here with the homebuyers paying more, I don't know how it is in every state but I'm pretty sure it's standard for home owners to pay no tax on their PPoR in most states (certainly in WA and fairly certain in NSW and Victoria). Homebuyers would essentially be able to buy their home without stamp duty and then pay no Land Tax.

    It would hit property holders/hoarders hardest by far and would almost certainly result in closing of trust loopholes that exist in many states to come more in line with the catch all style of stamp duty.

    Flippers would be fine with it, quite probably better off especially if rates remain even slightly similar to current land tax rates.

    I personally think it's a great idea. Stamp Duty is one of the absolute worst taxes from an efficiency perspective and is actually a genuine impediment to a correctly acting market. Land tax is pretty much the most efficient tax you will find, it doesn't impose itself on the poorest or those just looking to get by in life and only hits those who are looking to use property for extra personal gain. It creates a genuine incentive for people to make those assets productive or get rid of them. It's absolutely one of the best taxes in Australia in how it operates and who and how it targets (I know that is heavily pointed at this forum and thus it's not terribly popular!).

    I do agree entirely with you that the governments would take the chance to increase total taxes which would mean land tax stepping in to cover stamp duty, thus a significant rate increase is almost certain but going from the archaic and inefficient stamp duty to land tax would, quite simply, be a brilliant move (which means we're probably safe from seeing it, governments don't do forward thinking things like that!) and going from targeting anyone who wants to be involved to only targeting those hoarding property is a productive targeting of tax for the overall market.
     
  5. JacM

    JacM VIC Buyer's Agent Business Member

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    We shall see I guess !
     
  6. wogitalia

    wogitalia Well-Known Member

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    If they change it to target home owners as well that would change things but it would also significantly reduce why it is such an effective tax regime (although would hit those who happen to be sitting on assets well beyond what they need who have lower incomes like say the millionaire pensioners of another thread...).
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    Plenty of countries charge land tax on the ppor but yhey also allow ng on the ppor at the same time.
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Few countries allow negative gearing of property against ordinary earned income. There is one consistent thing about world taxes. Almost none are the same. VAT, Direct, Indirect, Sales Taxes, Excise, Import duties, CGT, Tax on the home !, Death Duties, Estate Taxes, Residency / Citizenship or non-residency and on and on....Many countries refuse to allow non-citizens to own property and we have limited rules. Hell we even exempt CGT on listed shares for most non-residents.

    Wiki source not verified........"Some countries, including Australia, Japan and New Zealand allow unrestricted use of negative gearing losses to offset income from other sources. Several other OECD countries, including the USA, Germany, Sweden, and France, allow loss offsetting with some restrictions. In Canada losses cannot be offset against wages or salaries. Applying tax deductions from negatively geared investment housing to other income is not permitted in the UK or the Netherlands.[1] With respect to investment decisions and market prices, other taxes such as stamp duties and capital gains tax may be more or less onerous in those countries, increasing or decreasing the attractiveness of residential property as an investment.[2]"

    Of course we also impose indirect levies like HELP, Medicare, Pte Health, super taxes and also have a basic universal scheme for super and medicine.