Is it Time to Abolish Stamp Duty?
If you’re like many Australians, you may be holding off on buying a home because you simply can’t afford to pay exorbitant stamp duty on top of the sky-high price of real estate. Indeed, the country’s real estate stamp duty, which varies from state to state, prevents countless would-be home buyers from achieving the dream of home ownership every year.
At the time the duty was created, it was strictly used to cover administrative costs, and housing prices were within the affordable range. Now, it’s a major source of revenue for state and territorial governments, and housing values are through the roof. With these points in mind, there’s no question about it: Stamp duty needs to be abolished.
Stamp Duty Land Tax: shared ownership property – Detailed …
Benefits of Stamp Duty
You’d be hard-pressed to find anyone who could rattle off the advantages of paying stamp duty on real estate transactions. Most Australians aren’t even sure how the money is used. State and territorial governments use revenues from collecting the tax for a variety of things. In some ways, then, the duty is used for the greater good.
That’s where the advantages end, though, and there are other ways to collect tax revenue that don’t involve charging so much extra money to people who are already struggling to become home owners.
Drawbacks of Stamp Duty
The drawbacks of stamp duty are considerable. In most parts of the country, real estate prices are staggering. Many people are pushed out of the market based on the value of real estate alone. Some could afford to buy modest homes but are prevented from doing so because they can’t come up with the extra money to cover stamp duty, which usually must be paid within 90 days of the completion of a real estate transaction.
Concessions for first home buyers and others are available in many areas, but they do little to mitigate the issue.
Stamp duty also forces homeowners to stay in homes they no longer need. People who might otherwise relocate for better jobs are unable to because they can’t afford to pay the duty. In this way, stamp duty has far-reaching effects on the labor market as well as the housing market.
Stamp Duty
Instead of giving home buyers sticker shock by imposing such a large, upfront fee, a better option may be to make changes to the land tax so that homeowners pay smaller annual duties. This would make buying a home more accessible to more people and could help make the real estate market more flexible in general.
Shift from stamp duty to property levy could raise $7bn a …
Category: Real Estate
