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. Trainee

    Trainee Well-Known Member

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    Like to see how they keep the retirees happy on this while raising enough money from land tax.
     
  2. Primary341

    Primary341 Well-Known Member

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    Perrottet has already said the budget would take a hit in the short term-medium term during the transition.
     
  3. Primary341

    Primary341 Well-Known Member

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    They would probably be exempt, or it would be paid when the property is sold (almost a death tax?)
     
  4. SarahM

    SarahM Active Member

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    I think they want to change stamp duty and have all paying land tax in their own house they live in... so if I buy a house for 1.45 mil and pay 66k stamp duty (as you have the option to pay stamp duty or land tax) the land tax is about $4500 a year on that 1.45 mil house, in years to come the land tax will be going up every year or so, so if you are paying that in your forever house, you will end up paying more than double, no thanks.
     
  5. Trainee

    Trainee Well-Known Member

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    then how would land tax pay for the drop in stamp duty?
     
  6. MB18

    MB18 Well-Known Member

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    As mentioned above, have a land late rebate to upto a participar value incorporated into the welfare system.
     
  7. MB18

    MB18 Well-Known Member

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    If your forever home turns out not to be your forever home you may well pay half.

    Not every one is going to to be a winner under such a system, but any reform towards land tax vs stamp duty will benefit society as whole I believe
     
  8. albanga

    albanga Well-Known Member

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    On the flip side it makes it much easier and cheaper to change with times.
    By that I mean take away the biggest cost of entry then people will be a lot more inclined to change homes which currently is simply unaffordable due to stamps.
     
  9. Lacrim

    Lacrim Well-Known Member

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    Correct. No need to publicise thought bubbles or any random thoughts, ideas, opinions etc in pollies' heads.

    Communicate it if you 100% intend to make it policy and when it will apply from.
     
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  10. 2FAST4U

    2FAST4U Well-Known Member

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    Length Of Home Ownership Continues To Rise

    The average property in greater Sydney is now held for 12.4 years for houses and 9.6 years for units. Even in the rest of NSW the average hold periods are 10.5 and 9.2 years for houses and units respectively.

    "The data suggest that home owners are much more reluctant to sell their property than they were a decade ago which is also highlighted by the ongoing decline in sales transactions. Other factors such as the rising cost of selling and purchasing property, combined with affordability constraints across some Australia’s more expensive capital cities contribute to owners holding onto their properties longer. It’s expected that this trend will continue over the coming years given such concerns aren’t likely to see much improvement in the near future".

    Scrap stamp duty, replace with a universal land tax – what are the impacts?

    "As a consequence of introducing the tax, land values would decline most in those suburbs in and around the CBD where land is currently most expensive (a drop of around 12 per cent), and less in suburbs further away from the CBD (a drop of around 8 per cent for properties 10 to 20 kilometres from the CBD).

    The modelling shows falls in house prices will exceed the value of land tax payments, leading to more affordable housing for both owner-occupiers and rental tenants. Removing stamp duty will make it easier for people to buy a home, and also to sell their home and move to places where employment opportunities are better. It will also encourage owners to sell their homes on high-value land, thereby speeding up development in areas where land is expensive and leading to more available and affordable dwellings".

    Personally I'm all for land tax. Hopefully they will grandfather it in and avoid double charging, particularly for people that have just paid stamp duty recently. In the short term government revenue will take a hit, but in the long term it seems like good policy.
     
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  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Based on the NSW media around the thought bubble concept for duty a BUYER of certain property may be able to opt out of the existing lump sum duty and instead bear a lesser annual charge - forever. This is a alternative to a immediate end to upfront duty which then has broader problems for existing owners v new owners and policy transition. I believe values of $2K - $4k pa were mentioned vs say $30K on a median Sydney home. Each buyer would need to consider their potential ownership period. A taxpayer who buys a main residence and maintains it for a long term may be better to consider the lump sum where some others may wish to spread the burden BUT if they later own the property for a long term they will have paid more tax than had they elected the lum sum. The policy bubble didnt discuss paying instalments until the lump sum was paid. It was a irrevokable choice of one or the other.

    The NSW proposal wasnt to replace land tax but just duty. I dont know why some property commentators made that additional leap.

    The scheme does seem a gamble. Lenders would also then include the annual charge in servicing calcs where at present buyers are expected to have the cash upfront.

    This proposal could assist buyer demand as it would mean more buyers could consider a property if they lack the duty lump sum upfront but some of these may already get duty concessions. It likely should increase demand by buyers without it being a freebie and accordingly could act to put some marginal upwards pressure on prices. My greatest concern with the proposal is flippers and speculators. The market could be saturated by short term buyers who could drive up prices for renovation potential property. If a market recovery was evident short term buyers could otherwise hold property to onsell being a very concerning outcome. To counter this a policy that imposes a minimum catch up duty on resale within XX months by the vendor could be considered. One of the state govt merits to the policy is it assists the market to have some demand stimulus and also would spread state revenue in place of its peaks and troughs.

    Yes its a thought bubble but proposals like this often start with the concept and market feedback. Many Govt policy is put out for public consultation before Bills are drafted.
     
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  12. Stoffo

    Stoffo Well-Known Member

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    You only have to look at the cost of buying/selling property in 1980 V's now
    The state got $1,000 if they were lucky and the selling agent approx the same.
    Today with the epic increase of property values the government gets $30,000+ per sale and the agent gets $12,000 (with their now reduced commission).
    It has been an ever growing cash cow for Govco !

    The idea of taxing a pensioner into the reallocation from their long term family home (containing so many memories, and a legacy/place to live/inheritance/windfall for their own kids) only to drive past later and see a skyscraper being "more efficent use" to free up supply that was previously bogged by high transaction costs and poor incentives (as in the pensioner example) is terrible for those older Australian's that worked hard for "their home".....
     
  13. MB18

    MB18 Well-Known Member

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    I don't think giving people a choice of stamp or tax is the best idea. For one it will raise grievance when later goverments inevitably decide to apply land tax to all regardless of whether someone initially opted to pay stamp to avoid the ongoing land tax.

    I think a well thought out transition / implementation strategy is the better option whereby previous stamp study payments are recognized for a period of time.
     
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  14. MB18

    MB18 Well-Known Member

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    Terrible at an emotional level for that particular individual yes. Any tax reform is about benefiting society as whole and not about protecting individual nostalgia.
     
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  15. Primary341

    Primary341 Well-Known Member

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    As Perrottet said, it wouldn't pay for it initially. There would be a drop in revenue - but over time that would change as more people have to pay a land tax.

    That's what is so good about it - it can't be avoided.
     
  16. Stoffo

    Stoffo Well-Known Member

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    Am sure I actually dislike change (largely because based on history, it is never ever to my financial benefit) please don't think that I am directing this at anyone as I am often noted as the conscious objector....

    Please correct me if I'm wrong, originally the Government land authority sold for money allocated parcels of land they "found/claimed" to a punter.

    After many years a taxation system was introduced primarily based on income tax, and at each point when the government expenditure exceeds that base income they introduce a new tax, excise or levy (term for tax reform when it suits them).

    Tax reform continues to target the middle class (I'm certainly no Packer or Rheinhart), I work hard physically as a gardener and have gone without for many years to service 3 mortgages, I didn't get a $750 handout or any subsidy recently as part of the benefits distributed to society as a whole.

    If my business expenses exceed my income I have to work harder and smarter or I end up bankrupting......

    Will the Australian government ever figure it out, or will we continue to one of the highest taxed in the world ?
     
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  17. MB18

    MB18 Well-Known Member

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    Fiscal responsibility, now there is a whole new debate.
    Agreed that its usually the middle class that seems to cop it disproportionately. Nonetheless I'm not against changes to a system to reflect new norms such as our increasing mobility - hence pro land tax.
     
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  18. Lacrim

    Lacrim Well-Known Member

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    One certainty is that whatever they come up with, it'll result in us paying more over the long term, not less.
     
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  19. Car tart

    Car tart Well-Known Member

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    The solution to every state’s problem is to put stamp duty on share transactions at the same rate as Real Estate. The bottom 99% earners get slugged $50k for every million dollar property investment. The top 1% rarely have property portfolios like us, they have enormous share portfolios which are stamp duty free. This is based on friends who are billionaires and two associates who are accountants for billionaires.
    If a 5% duty was charged on a $million share transaction it would stop stock market speculation and make for stock market investment only.
     
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  20. Shawn

    Shawn Well-Known Member

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    I love the way you think @Car tart however this would remove liquidity from the markets and that's what they are there for - the more liquidity the better (Although that can sometimes lead to more volatility too!)