Henry says "move it"!
Amongst the mile of changes to our tax system recommended by the Henry Review, there’s one that many in the property industry have dismissed out of hand. Mr Henry and Co. proposed that land tax should be paid by all property owners.
It’s controversial because it’d be a massive increase on the current land taxes that only apply once you own a minimum value of property (unimproved or UCV – see your rates notice for yours). In Queensland it’s currently $350,000 for company-owned or $600,000 for individuals (approx 2 good Brisbane houses).
But maybe the critics have been too hasty – and hear us out here! Henry suggests a simultaneous scrapping of stamp duties on the transfer of property, arguing this tax leads to inefficient use of our housing stock. A typical inner Brisbane house purchase costs the buyer $22,000 in stamp duty ($15,000 if they’re owner-occupying) and this high cost penalises the changeover of housing. Empty-nesters for example are staying in the 4 bedder long after the kids have left home and the spare bedrooms aren’t been used.
An ABS survey suggests one in six Queenslanders have been in their home for longer than 20 years. They also found 14% of us move to get a bigger place, compared to less than 3% who downsize. Addressing the housing affordability issue, Henry says less hurdles to moving will encourage us to a smaller place. Why not swap the spare bedrooms for a more modern place with other features we want?
The States will rightly be nervous of scrapping stamp duties, with more than 40% of their income coming from property transactions. But a broad land tax would be more predictable and allow better govt budgeting. Of course as real estate agents we love the idea – we’d vote for a mandatory 5 years maximum in your home!
But what do you think? Would you prefer to pay land tax or stamp duty? Please post your comments.