NSW, VIC to abolish stamp duty

Discussion in 'Property Market Economics' started by Peter2013, 19th Apr, 2020.

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  1. Peter2013

    Peter2013 Well-Known Member

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    NSW, Victoria push to replace stamp duty with land tax

    Buyers who hold off in NSW and VIC until the legislation is passed could save tens of thousands of dollars on their property purchases.

    "Stamp duty on residential properties are particularly costly as they add to the cost of buying a house and therefore discourage people from downsizing, or moving closer to preferred jobs, schools and family," according to the NSW discussion paper.

    "We also heard how it can often have the worst impact on first-home buyers and seniors. By hindering mobility, we heard stories of people living in housing that doesn’t meet their current needs.”
     
    Last edited: 19th Apr, 2020
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Holy crap. I bought a $300 book on stamp duty which will now be mostly wasted
     
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  3. Owlet

    Owlet Well-Known Member

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    you can claim it as a tax deduction :D
     
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  4. vbplease

    vbplease Well-Known Member

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    I’m not subscribed to afr so can’t read it.. I wonder how it will work? For someone that has just paid $50k in stamp duty, they’ll start paying land tax?

    I suspect flipping (renovating for profit) will become more attractive.. there may be a short term spike in median house prices equal to stamp duty..
     
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  5. Archaon

    Archaon Well-Known Member

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    depends if they replace a one off 18k payment with an ongoing 4k payment, you would be worse off after 5 years PPOR, though you could claim land tax back on IP's, so would be a hit to yields.
     
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  6. Primary341

    Primary341 Well-Known Member

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    Misleading thread title.
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    If the govt passes new legislation making your new reference book no longer relevant, will you be able to write it off in the year of purchase sad opposed to depreciating it sad part of your library?
     
  8. bunkai

    bunkai Well-Known Member

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    I guess the economists have decided that the housing market doesn't have much upside for growth and thus the transition to land tax. I suspect that the tax revenue growth will come as increased land tax.... The ACT is ahead of the curve on this transition and land tax is 25% more than NSW for a property worth 1200000 for example.
     
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  9. Spad

    Spad Well-Known Member

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    Is it an ongoing payment for life or is it what you would usually pay upfront payed over a number of years?
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Land tax is payable every year that you are over the threshold. The govt will make more money this way. And more people will buy and sell more often.
     
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  11. 2FAST4U

    2FAST4U Well-Known Member

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    I agree that the intention is for the government to make more money. The average Australian owns their home for around 11 years before selling it (up from 6 odd years in the early 2000's).
     
  12. tonyvooz

    tonyvooz Active Member

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    The government should provide discount or credit to owner who had paid stamp duty before it being abolished. I think giving discount is the best way to go about (e.g. 50% discount for 10 years) so they can still have revenue but not entirely screw current prop owners over
     
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  13. kaibo

    kaibo Well-Known Member

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    good luck getting it passed without a whole lot of exemptions which will lead to minimal windfall for government. Good luck getting land tax off PPOR and investors are being smashed already
     
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  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I recall GST inflows were meant to cancel stamps over time ? Could be wrong of course

    ta
    rolf
     
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  15. wylie

    wylie Moderator Staff Member

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    That's what was being sold at the time. Never happened. That's why I wouldn't really trust what is being sold now.
     
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  16. New Town

    New Town Well-Known Member

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    Might increase demand for apartments as they usually have small land value components.
     
  17. Omnidragon

    Omnidragon Well-Known Member

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    Only a suggestion. Increasing land tax Same same
     
  18. S1mon

    S1mon Well-Known Member

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    ACT can certainly be used as an example. I think its more about stable revenue rather than upside. but as @petewargent sometimes commentates, it aint good for renters. That is despite the boatload of apartments (supply) coming on the market.

    eg
    How's the ACT land tax going? And what it means for property investor supply: Pete Wargent

    To give my example, on roughly 23k rent I pay 14% to land tax, 10% to rates...had been compounding away at very high % for years..give it 5 years and no doubt it will be a lot higher. It just exacerbates the already very high costs of living. no threshold either so even if you own some crappy cheap apartment your costs are very high.

    If i recall correctly they have already pushed back their timeline / slowed down the planned changeover as they realised they just can't keep gouging investors willy nilly with no impacts.



     
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  19. Gockie

    Gockie Unicycle - get exhausted but never two tired Premium Member

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    People might start to get out of property investment, thus decreasing property prices. Good for younger people wanting to buy PPORs. Older people just wanting to make their money work for them without this additional ongoing cost might look to alternative investments.

    There are a lot of old people living in their family homes in very desirable areas. These people may be living all alone. They have no incentive to move as their PPOR isn't counted as part of the pension.

    This change may or may not make them move out. A change in policy will make some of these people move, it would also free up these homes for other people who want homes like this and could use that space. Some of these people are in good health but others aren't. Sentimentality though, I know a lot of people wont want to move from the home they lived in for 60+ years.

    Not sure how it would be applied to already own properties, guess some phased charge would be used, perhaps something like @tonyvooz suggested.
     
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  20. Propagate

    Propagate Well-Known Member

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    Fairest way would be to only start the new charging from next time a particular property is sold, so if you've recently (or even a while ago) purchased and paid stamp duty no further tax is payable until next time that property is sold?

    I'd be a bit miffed if I had to start paying more tax on my PPOR after paying a butt load in stamp duty just over a year ago when we bought it, but if we sold and purchased elsewhere I'd be happy to pay an annual tax instead of a lump sum stamp duty at the start.
     
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