Did NSW & Vic Treasurers just kill the property markets?

Discussion in 'Property Market Economics' started by Car tart, 5th May, 2020.

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  1. Car tart

    Car tart Well-Known Member

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    Were you, like me, astounded to hear the two treasurers talk about wiping out stamp duty on home purchases in their respective states? Whilst the educated know that means generational change, we had an offer on our property withdrawn immediately after Mr Perotet made his ridiculous announcement without clarifying that it was not in the near future.
    The average buyer obviously thinks if I wait a week or three then I won’t be slugged with stamp duty on the purchase price. How could they honestly allow such ill thought out concepts to be half uttered so that buyers are scared to continue.
     
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  2. Peter2013

    Peter2013 Well-Known Member

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    Removing stamp duty will allow buyers to spend more money - it should push up house prices by the stamp duty amount.

    Who doesn't like booming house prices?
     
  3. Mr Burns

    Mr Burns Well-Known Member

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    What a silly forum title. Removing a tax will increase the price of property. It will be a mini boom.
     
  4. Stoffo

    Stoffo Well-Known Member

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    Paid for many times over, FOREVER.......
    Short term gain, resulting in long term pain.....

    @Car tart you are probably better off, any buyer bailing out on such a rumour could have been problematic (fail finance, not settle on time, other)

    Maybe I just dislike change :oops:
     
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  5. Lacrim

    Lacrim Well-Known Member

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    Make this effective now pls!
     
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  6. snoopy

    snoopy Well-Known Member

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    This is a thought bubble from the State governments who haven’t explained how they will fill the huge revenue gap. I assume some form of broader land tax.

    The media and people love the headline without realising there is another tax to replace this. I can’t see it ever getting through parliament but agree unneeded speculation.
     
  7. Primary341

    Primary341 Well-Known Member

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  8. Mr Burns

    Mr Burns Well-Known Member

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    So what would you prefer? Stamp duty or property tax? 4% upfront or say 0.2% per year forever? Seems like it may be a choice for buyers?

    As an investor, I'd go with the latter as it's tax deductible. Stamp duty is not.
     
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  9. ttn

    ttn Well-Known Member

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    If most of the duties transactions are replaced by small amount of land tax per year, how would that help with the State budgets yearly? Not that the State Govt has a lot of surpluses unless they plan to sell more assets? ;)
     
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  10. Car tart

    Car tart Well-Known Member

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    The average property is held 7 years, so the NSW $50,000 average stamp duty would translate as $7,000 pa. And this would not bring in $1.00 extra so it would need to be about 1% per year about 5 times your figure.
    No choice for buyers.
    Wipeout for Gladys.
    But you missed the point of the thread! Who will buy during interim period? How do they stop double charging?
     
    Last edited: 5th May, 2020
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  11. wylie

    wylie Moderator Staff Member

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    This is the problem. Perhaps if they grandfather anything purchased before a cut off date, that will stop people holding off buying and paying duty plus paying annually.

    They should make these decisions before announcing or leaking anything for exactly the reason you've mentioned @Car tart.
     
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  12. Archaon

    Archaon Well-Known Member

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    It will depend solely on the ratio, as you are stating, you would be worse off after 14 years, rising value/CPI.
     
  13. shorty

    shorty Well-Known Member

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    More certainty of revenue for starters, not tied to property sales, just values.

    I'd assume at the point they flip the switch anyone who paid stamp duty on their currently owned property would be exempt (at least for a number of years) then everyone from then onwards would pay land tax.
     
  14. Fargo

    Fargo Well-Known Member

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    I would prefer 4% of nothing, The metrics for buying a property should include stamp duty.
     
  15. MB18

    MB18 Well-Known Member

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    Copied from another thread..

    From a societal point of view it is very hard to argue against the merit of land land tax replacing stamp duty.

    The goverment tax take will be smoothed and more predictable (aka subscription model), any changes to the taxation model will be more pronounced and immediate, land will be reallocated to more efficent use (discourage the single pensioner living alone on that prime inner city develpment site).

    I dont believe there will be material change in house prices either. A prospective home owner is still going to have to assess the properties affordability taking into account the new tax rather than simply adding the stamp onto the mortgage, furthermore the reallocation of land to efficent use will free up supply that was previously bogged by high transaction costs and poor incentives (as in the pensioner example).

    As a tenant I dont buy the argument rents will increase as I am sure most landlords are already letting thier properties for the most they can, and for landlords I assume this would be a tax deductable expense.

    The implementation would be the key, and one would assume regognition for previously paid stamp duty would apply. ie a matrix determining land tax rebate for stamp duty paid in the last several years for example.

    The land tax could extend into the welfare system whereby a person receiving a government benefit could also apply for a land tax rebate to a maxium of $X to subsidise thier cost of living.
     
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  16. Bunbury

    Bunbury Well-Known Member

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    Land tax is the crack cocaine of state taxation revenue. The NSW and Victorian treasuries are on a massive land tax bender. They've realised that if they chase stamp duty into land tax and inject the gear straight to the vein it will be their biggest hit ever.

    Since 2015 land tax in Victoria has jumped from $1.7 billion to $3.5 billion p.a. Over the same period land transfer duty has merely increased from $5.8 billion to $6 billion per year.

    Land transfer duty statistics by year | State Revenue Office
    Land tax statistics | State Revenue Office
     
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  17. MB18

    MB18 Well-Known Member

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    That sounds more like an issue with the rate of taxation, not the type of taxation.
     
  18. Bunbury

    Bunbury Well-Known Member

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    Indeed; partially.

    I can't see the states providing equitable relief on the rate of the proposed broad based land tax for those who have carried the states by paying unreasonable duties and land taxes up until now. They haven't yet shown any interest in doing this. They have so far refused to alleviate this burden through their unwillingness to rebalance the rates for more than a decade despite the avalanche of tax revenues they have accumulated by not indexing these rates.

    Then there is the issue of double taxation for those who have already paid grotesque amounts in duty and obscene land taxes. I hope there will be fair grandfathering but I'm not holding my breath.
     
    Last edited: 6th May, 2020
  19. whiteknight

    whiteknight Well-Known Member

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    I just don't understand how governments' will plug the holes in their Budget if they scrap Stamp Duty (being paid upfront by a buyer). NSW's budget statement for 2019-20 has forecast Stamp Duty ($6.9 billion) to contribute 21% to the state's Total Taxation Revenue. You simply can't replace that overnight.
     
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  20. albanga

    albanga Well-Known Member

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    I love the potential of being able to move property more freely. I think agents may get a lot more business and if that somehow translates to reduce comms allowing very cheap exit/entry then that becomes a game changer for the property market.
     
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