NSW, VIC to abolish stamp duty

As much as I like the sound of this idea, do you think it would stop people from selling to delay paying land tax?

 

If only SA was onboard with this!

 

Wouldn't have thought so. If you're selling to re-buy then wouldn't you rather a smaller, regular tax bill than a massive front loaded one? All depends on how much the new tax would be compared to stamp duty etc.

...and if you're selling but no re-buying then it makes no difference.

 

Yes that would be fair way to do it. Currently stamp duty is way too high, to the point it is counter productive. In my area the average length of ownership has nearly doubled in 25 years - people don't move as the transaction cost are too high. Halve the transaction costs, then people would move twice as often, and the revenue would stay the same.

 

Do you think the govt will be fair?

 

No. Never.

 

Double Dipping if they don't.

If they did bring it in to all properties, regardless of whether you'd already paid a motza in stamp duty, I'd be tempted to move for the sake of it, just to feel like I was getting some value form the new tax. If I had to start paying it on a property I'm already living in, may as well use it as an excuse for a change of scenery and pay it on a new place instead.

Different if it's an IP though, depending on time frame and actual additional costs, it may encourage me to offload mine and get out of resi IP altogether.

 

I'll put my doomsday agent hat on here

At first, a mad rush to sell for upgraders, lots of comms for agents, lots of new entrants to the market, time to buy listed real Estate agents/Domain/RE.com.au. Short term price increases reflecting the removal of SD (a bit of overexuberance as well).

Next, agent comms will be slashed as there is more activity in the market as well as more competition. Agents will start to get hammered, newer entrants/dinosaurs will disappear.

As the market establishes a new norm, it'll become BAU.

 

Australia should allow people to claim their PPOR off their taxes, interest, rates, tax etc.

More incentive to buy a house to live in, less incentive to rentvest.

Added to that that stampduty could be landtax on individual home owners, they cost of housing would just go up under this arrangement.

 

Looks like everyone is on-board.
Support for land tax becomes tri-partisan

 

How many pieces of toilet paper will it make

 

Canberra gets a pretty bad rap in the popular property media regarding its land tax.

When I made the call to invest in Canberra the upside of ACT stamp duty was that 1) its a tax deduction on leasehold land and/or 2) deferrable for 5 years and payable over a further 5 years for FHB.

In hindsight I feel that getting in to the market earlier than I otherwise would have (If I purchased say a similar 550k asset in Sydney in nov17) with the above concessions was worth the extra 2.5k land tax a year, and the growth i got in that time allowed me to leverage into new assets.

 

For people who own IP you already have to pay land tax all this while isn't it it?

So won't this actually benefit new investors buying IPs?

 

According to the AFR article SA has already made the change to a yearly land tax - can anyone comment on how this was phased in? Or was anyone who paid stamp duty the day before the law change came into effect out of luck?

 

I believe SA only abolished duty on commercial properties

 

The high transaction cost with stamp duty is exactly why we have been forced to rentvest.
We feel that we have no other option. we don’t want to have cash sitting in the bank losing to inflation/ crazy housing leverage or have to put up with a daily 2+ hrs commute. It does feel sad sometimes for not being able to live in our own home but we have managed to adjust our feelings over the years...

 

Where they are starting to do this in the act there are no councils only act govt rates so it is a bit different.. so they are putting up rates as well as land tax and all investors pay land tax in the act there is no threshold and the land tax was thousands a year for one ip before this even started. So investors with one ip in nsw or vic who might be paying nothing or a small amount of land tax now would end up jumping to massive amounts. In nsw and vic they are going to have to start actually charging land tax to owner occupiers (unless they somehow get the councils on board for higher rates) as well as removing the threshold so all investors pay land tax (I can't also imagine them NOT having a higher rate of land tax for investors like they do on council rates in QLD) so it is going to be a lot more politically difficult than just increasing existing taxes a lot over a number of years. Plus in the ACT labor can do whatever it wants as they are such rusted on labor voters so labor knows it can get away with it despite the grumbling so it will be interesting to see what they actually do in the other states. Rental yields are much higher in the act certainly than say Melbourne so there will be a lot less ability to absord the vast amounts of land tax paid in the act.

 

Put the GST up to 15%. The extra 5% goes to the state where the purchase was made. Get rid of both stamp duty and payroll tax.

 

Some in Vic have used the stamp duty "one off" exemption or downsizing to actually upgrade their ppor (moved further out from inner ring, but to a modernn similar sized residence worth far more) to make/have their money work harder "tax free" than it could in the bank........

It could be beneficial for those that relocate for work !
Thus reducing travel times and traffic on the roads.....
Should I need to relocate for work I'd currently look at rentvesting, if this change is introduced I would buy/sell and move (putting my former property investment funds into another investment form other than property !)

Either way I guarantee it will be yet another cash grab (like when gst was introduced), we could end up with BOTH or 3 taxes yet !!!!

Imagine having Stamp duty, a record keeping fee, Land tax, record keeping fee, a title fee all applied to any investment property

 

I believe GST will need to be broadened to all goods and services and increased to 15%, but its not as good a solution as a broad based land tax.

GST revenue is collapsing just as fast as stamp duty. Households have stopped buying discretionary purchases. Households are also cooking more fresh food (GST exempt) and forgoing fast food and restaurants (GST included). Fewer people are driving, hence less revenue from GST levied on Petrol (and fuel excise).

If you increase GST to all goods and services, you will capture all the fresh food and health services. But as the economy contracts and less money is spent, so does GST. It's not as stable income than Land Tax.

It is harder to avoid paying land tax. You can't destroy land, so it should be a very predictable and stable revenue source. And if you need to generate more revenue, you can just bump up land tax a little.