Welcome Guest [Log In] [Register]


Reply
Land Tax vs Stamp Duty: Push to fine-tune taxation base; First homebuyers could be allowed to pay off their stamp duty over several years
Topic Started: 13 Oct 2011, 12:13 AM (2,328 Views)
Admin
Member Avatar
Administrator

Quote:
 
Does stamp duty limit housing mobility?

July 30, 2012 – 7:21 pm, by Alan Davies

Stamp duty scale for purchase of principal place of residence (Victoria)
Posted Image

At the same time as many Australian households live in dwellings larger than they need, others can’t find affordable homes big enough to cope with family life.

The average number of bedrooms in our homes has increased over the last 15 to 20 years, yet average household size has declined. Older Australians in particular are spoiled for space – 84% live in homes with one or more spare bedrooms.
“a 2 percentage-point increase in stamp duty may reduce mobility of homeowners by around 40 percent.”

The problem with this mismatch is it makes it harder for some households to find affordable, appropriately-sized housing in locations they prefer. Some may travel longer distances to work than they otherwise would. Some, like “empty-nesters”, who already occupy dwellings larger than they want are deterred from down-sizing.

A key reason is the high level of stamp duty levied on home purchases by State Governments. In Victoria, for example, a dwelling that costs the median price (circa $530,000) incurs a stamp duty liability of $23,770 (see exhibit).

That’s equivalent to 4.5% of the purchase price! For households who have the option of staying put, that’s a very large disincentive to moving to a dwelling that’s a better fit. It limits the ability of property markets to sort households into appropriately sized and located dwellings.

A new study undertaken by the Spatial Economics Research Centre at LSE throws light on just how large that impediment can be. The researchers, Christian Hilber and Teemu Lyytikäinen, find that higher stamp duty on dwelling purchase negatively affects a household’s propensity to move.

The scale of the effect is astonishing. Their headline finding is a “2 percentage-point increase in the stamp duty may reduce mobility of homeowners by around 40 percent.”

Hilber and Lyytikäinen exploit a “discontinuity” in the UK tax schedule where the duty payable jumps particularly sharply, from 1% to 3%.

This discontinuity allows us to isolate the impact of the stamp duty from other determinants of mobility. Specifically, we compare households with self-assessed house values on either side of the cut-off, while controlling for flexible but smooth functions of house values.

They find stamp duty in the UK has “very substantial detrimental effects on the functioning of the housing market.” However its impact is largely confined to short distance moves (less than 10 km).

They interpret this as meaning stamp duty discourages households from moving to their preferred form and size of housing. It has only a limited effect, though, on longer distance moves made by households for job-related reasons and hence, they say, doesn’t significantly affect the efficiency of labour markets.

Hilber and Lyytikäinen also conclude that stamp duty is an inefficient tax compared with something like land tax. They cite research that finds a 2.5% stamp duty imposes a dead weight loss of 17-34% of the revenue collected.

Caution is in order in applying their findings directly to the Australian context. The sheer size of the estimated impact might be affected by the peculiarities of the UK tax system.

The duty on a £250,000 dwelling is £2,500 (1%), but on a £250,001 dwelling it’s £7,500 (3%). As the exhibit shows, the tax scales in Australia are relatively smooth.

Nevertheless, a scale like Victoria’s that takes 4.54% on a dwelling costing $550,000 and 5.11% at $551,000 is bound to have a large retarding effect on households changing to more suitable dwellings/locations as their circumstances change. Replacing stamp duty on principal place of residence transactions with a land tax levied annually on all properties would be a more efficient approach.

Read more: http://blogs.crikey.com.au/theurbanist/2012/07/30/does-stamp-duty-limit-housing-mobility/
Follow OzPropertyForum on Twitter | Like APF on Facebook | Circle APF on Google+
Profile "REPLY WITH QUOTE" Go to top
 
Count du Monet
Member Avatar


Does stamp duty limit speculator house flipping mobility?

Fuck Yeah!

Yes, we must defray the cost of speculator house flipping to ordinary owners.

There's specufestor shit dying out there! :o
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
Profile "REPLY WITH QUOTE" Go to top
 
NotFooled
Member Avatar
The Bear Whisperer

Count du Monet
6 Aug 2012, 04:15 PM
Does stamp duty limit speculator house flipping mobility?

Fuck Yeah!

Yes, we must defray the cost of speculator house flipping to ordinary owners.

There's specufestor shit dying out there! :o
Speculators buy low and sell high so the purchaser pays more stamp duty.
Profile "REPLY WITH QUOTE" Go to top
 
Count du Monet
Member Avatar


NotFooled
6 Aug 2012, 05:27 PM
Speculators buy low and sell high so the purchaser pays more stamp duty.
No, speculators flip houses every second year.....so it is they, who currently pay more stamp duty.

That's why they are screaming, they buy a place and flip it a year later and stamp duty is big chunk out of their game.
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
Profile "REPLY WITH QUOTE" Go to top
 
nipa hut
Default APF Avatar


Count du Monet
6 Aug 2012, 07:04 PM
No, speculators flip houses every second year.....so it is they, who currently pay more stamp duty.

That's why they are screaming, they buy a place and flip it a year later and stamp duty is big chunk out of their game.
Intelligent tax design focuses much more on the optimum deployment of labor than on squelching arbitrage opportunities. Why penalise owners (whether O/Os or investors) for trading properties, as long as the yearly taxes on the properties they do own fund appropriate levels of government service in the area?
Profile "REPLY WITH QUOTE" Go to top
 
Joseph
Default APF Avatar


SA .gov is actually considering stamping it out completely (pun intended)

http://www.adelaidenow.com.au/news/breaking-news/sa-considering-stamp-duty-reform/story-e6frea7l-1226441149629

Propert turnover is so low this year they need to figure out some way out of their crippling debt. They actually had the gall to suggest it would save home owners 3k dollars a year even though they are planning a broad based land tax system to replace it. Turd bags.
Profile "REPLY WITH QUOTE" Go to top
 
NotFooled
Member Avatar
The Bear Whisperer

Land Tax vs. Stamp Duty??

Posted Image
Profile "REPLY WITH QUOTE" Go to top
 
themoops
Member Avatar
Ruby Member
High house prices limit mobility. Not stamp duty. :re:
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
Profile "REPLY WITH QUOTE" Go to top
 
Count du Monet
Member Avatar


NotFooled
6 Aug 2012, 09:12 PM
Land Tax vs. Stamp Duty??

Posted Image
It's not good enough to just tax the land. We need a building and improvements tax to go with it!
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
Profile "REPLY WITH QUOTE" Go to top
 
Joseph
Default APF Avatar


Count du Monet
6 Aug 2012, 09:48 PM
It's not good enough to just tax the land. We need a building and improvements tax to go with it!
We do it's called gst.
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy