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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 (2,326 Views)
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UK urged not to increase property stamp duty further

Monday, 03 December 2012

UK Chancellor George Osborne is being urged not to tinker with property taxes when he makes his Autumn Statement later this week or in his 2013 Budget.

In March 2011 stamp duty was increased to 5% for properties above £1 million, affecting many ‘ordinary’ family homes in London and the south east where property prices are much higher than the rest of the UK.

In March this year stamp duty was increased further to 7% for people buying properties over £2 million in their own name and 15% through corporate vehicles.

Both moves are regarded by many experts as having had a negative effect on the residential property markets. Last week, London Central Portfolio (LCP) reported a 53% decrease in Greater London transactions between £2 million and £5 million caused by the legislation changes.

Newly analysed data now reveals that this suppression extends to the whole of the country. According to HM Land Registry, sales between £2 million and £5 million across all of England and Wales have fallen by 30% in the third quarter of 2012 compared with the same period in 2011. Even the prime central London market has seen a reduction in sales of 9% across the board this quarter.

LCP points out that this has resulted in a massive loss in stamp duty to the exchequer. It puts this at £203 million. It also reckons that this has hit jobs and therefore the general economy.

‘Given the fragile state of the property market, stamp duty is unlikely be tampered with under the £250,000 mark where 75% of all of purchases take place. However, anyone with a property worth £250,000 upward should be on guard for higher charges at the next Budget and that means half of all the buyers in greater London,’ said Naomi Heaton, chief executive officer of LCP.

LCP has calculated that a fall in sales of 30% for all properties between £250,000 and £2 million on the back of a 1% increase in stamp duty would result in a further net loss of £297 million in tax receipts over one year.

‘Given the evident negative impact of higher taxes, in what is traditionally a buoyant quarter, and continuing uncertainty whilst buyers wait on tenterhooks to see where the next blow will fall, there is likely to be a further reduction in activity and associated economic fall out. Increased taxes do not always result in increased revenues and the tax losses due to SDLT changes are a clear example,’ added Heaton.

Read more: http://www.propertywire.com/news/europe/uk-property-stamp-duty-201212037204.html
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NSW land tax threshold for 2013 is $406,000

By Jonathan Chancellor
Monday, 24 December 2012

The NSW Valuer General has determined that the land tax threshold for the 2013 land tax year is $406,000.

Every investment property, or portfolio, above that level will be billed state government land tax.

It reflects a 2.5% increase on the threshold for the 2012 land tax year which was $396,000.

The threshold for the 2011 land tax year was $387,000.

The principal place of residence is generally exempt from land tax.

The NSW Valuer-General Philip Western will issue individual new valuations in January 2013 that will form the basis of tax assessments sent out by the NSW Office of State Revenue next year.

The state government bases individual assessments on rolling three-year averaging of land valuations to take account of changing property values.

The state government collects about $2 billion in land tax a year. Non-residential properties account for about 60% of land tax revenue.

If you own several land items, the value of all your liable land will be added together

The NSW premium land tax threshold for the 2013 land tax year is $2,482,000.

The premium land tax threshold for the 2012 land tax year was $2,421,000.

The premium land tax threshold for the 2011 land tax year was $2,366,000.

Read more: http://www.propertyobserver.com.au/news/nsw-land-tax-threshold-for-2013-is-$406000/2012121058382
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skamy
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IMHO, if stamp duty is removed it is very likely to lead to inflation of house prices as the current group of buyers compete for the same houses with extra money in their pocket. The sellers will think they have gained and feel richer,but they will actually need the extra cash to repurchase. The taxman gets the tax anyway and probably will increase overall taxation while they are at it.
I think stamp duty is also a deterrent for some of the worst speculator behaviour, buying to flip etc.
This has been an interesting thread as so many people, bears and bulls seem to want to get rid of it.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Count du Monet
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skamy
27 Dec 2012, 02:15 AM

I think stamp duty is also a deterrent for some of the worst speculator behaviour, buying to flip etc.
That's why the bulls scream like stuck pigs. Their ideal is to play speculative games, but they aren't merely content with that freedom. They'd want everybody else to pay the cost of their fun and games. They seem to think residential housing only exists for them to play the middle man.
The normal idea was a house purchase was a long term commitment, but not for the bulls.
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
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miw
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Count du Monet
27 Dec 2012, 05:19 AM
That's why the bulls scream like stuck pigs. Their ideal is to play speculative games, but they aren't merely content with that freedom. They'd want everybody else to pay the cost of their fun and games. They seem to think residential housing only exists for them to play the middle man.
The normal idea was a house purchase was a long term commitment, but not for the bulls.
Count, I don't think we have a single house flipper on the forum. Where do you get that idea?

FYI I favour retention of stamp duty over a broad-based land tax for much the same reasons as Skamy. Taking off stamp duty will have a very short-lived benefit for FHBs and long-term investors and only be beneficial to upgraders and flippers. It's the latter two classes who arguably have the most propensity to drive bubbles. Also the drop in stamp duty receipts when the economy is slow makes state governments pull their heads in which is probably a good thing. Friction can be helpful at times.
The truth will set you free. But first, it will piss you off.
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Count du Monet
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miw
27 Dec 2012, 11:24 AM
Count, I don't think we have a single house flipper on the forum. Where do you get that idea?

Of course not............they're too cheap. They know it will cost them to flip, that's why they don't do 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
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Land tax would encourage developers to turn over land quicker but with unintended consequences: Angie Zigomanis

By Angie Zigomanis
Thursday, 07 March 2013

Without knowing exactly the type of land Prosper is referring to, I would say that the total land banks of the major developers (248,607 lots) does not reflect land that can be turned into vacant lots tomorrow.

Many are likely to be awaiting rezoning, planning approval, trunk infrastructure and services, etc, that have to be in place first before they can subdivide. As a result, the amount that can be brought to the market at any one time is likely to be much lower.

However, having said that, there is probably an argument, particularly in some corridors that a lack of competition and control of land releases is keeping prices up.

A land tax for zoned land may also encourage developers to turn over their land quicker if they are holding zoned land. If more land is forced onto the market in a corridor, then it could also result in price competition.

However, there could also be some unintended consequences.

For example, developers could delay seeking to rezone former cow paddocks to residential as late as possible to minimise the extra land tax. However, any additional delays in the planning process could mean that the land may not be zoned and ready when the market catches up, placing supply pressures in the local region and driving up prices anyway.

Additionally, if developers start building to a price and for speed rather than quality, then there may be lesser investment in product, environmental features, community infrastructure, etc.

The Prosper article includes a link to an article from The Age with a reference from the chief operating officer of Delfin. He talks about the days when the number of competitors were too numerous to count, but the estates back in those days did not have the level of community investment of the larger estates you see nowadays.

Also, you would need to keep on top of other factors to prevent prices rising too far. At the end of the day, prices are governed by demand and supply, and the rate of supply needs to be able to meet the surges in demand.

This was part of the problem occuring during the boom in Perth in the middle of last decade. Initially, the rate of subdivision was able to keep up without large pressures on prices. However, as demand continued to increase and skills shortages emerged in planning, construction, etc, substantial delays began occurring that drove up prices despite the large level of zoned land that was available.

This also happened to some extent in late 2010 in Melbourne.

Therefore, at the administrative and construction end, you would need to guarantee a smooth process to ensure that land can be zoned and taken through the whole process quickly enough to meet the surges in demand.

There is also the issue of state and local government levies and infrastructure charges. These are charged to the developers who in turn pass them onto the purchasers and have also contributed to the increase in price of land over the past decade.

So the short answer is the concept of taxing zoned land to speed up development is likely to increase price competition and encourage further development of land.

On their argument, this would best work in areas where there are plenty of land holders to create competition, although it doesn't solve the problem where there is not enough competition in the corridor which would allow developers to just factor the land tax into their prices - i.e. a developer would balance their rate of sale to the market with the price they can achieve and the additional cost of the land tax in such a way as to maximise profits.

Even where there is competition, you would also need to ensure that the process of the delivery of the subdivided land is as smooth as possible so that the rate of development can be scaled up quickly enough to meet demand in an upturn without placing pressures on prices. In addition, in circumstances where developers are competing on price, it could impact on the type and quality of the product being offered.

Angie Zigomanis is senior manager of BIS Shrapnel.

Read more: http://www.propertyobserver.com.au/news/land-tax-would-encourage-developers-to-turn-over-land-quicker-but-with-unintended-consequences-angie-zigomanis/2013030659733
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Stamp duty needs reform

Robert Carling

State governments enjoy real estate booms, because rising prices and turnover combine to send stamp duty revenue gushing into the Treasury coffers. But the states’ reliance on this source of revenue is unhealthy and highlights the need to rethink how states are funded.

The beginnings of the Sydney boom helped push the NSW budget to an unexpected operating surplus in 2012-13.

The huge increase in the weight of stamp duty on real estate transactions over time is a concern, not only because of the burden it places on buyers and sellers of homes, but also because stamp duty is widely recognised as one of the most distorting taxes. At the margin, it locks people into inappropriate housing and discourages mobility.

For these reasons, various government-initiated tax reviews, including the Henry review, have recommended replacing stamp duty with broader and less distorting taxes, including land tax.

States are right to say they need growing revenue bases, but property stamp duty is one that fails other criteria for sound revenue raising. Stamp duty reform is needed by re-examining how states are funded overall.

Read more: http://www.afr.com/p/opinion/stamp_duty_needs_reform_y8icDtPp9yLluOeNL4VVNN
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Don't Buy Now
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Stamp Duty is profoundly regressive, volatile and pro-cyclical (no, that’s not a good thing). It traps citizens in and out of housing. Land tax is a much better base, with minute admin costs. It is impossible to avoid or pass on.

Deadweight losses cost Australia over $70 billion a year (KPMG Econotec). This is money squirted up against the wall by poor taxes. (though not the incidence of taxation, which is where NMT is trying to take the discussion).

Tax reform is the single most useful thing government can do to improve the quality of our lives. We need to discuss this soberly, and not be distracted by switching the focus to our anger on spending.

Those who own this consumption asset outright are unmoved by price. In fact, lower land prices would better suit their interests, making the cost of change lower and of access for their kids and the next generation generally more affordable. This is the path of prosperity.

The heavily geared – FHBs, ‘Gearers – want rising prices as it significantly improves their balance sheet. Banks want it too, as it raises the customer’s equity on last year’s loan (they can charge risk interest rates on assets with very good equity backing – nice business) and makes this year’s loans bigger.

Pretending the forces against tax reform are greater than those for is a nihilism that plays to the vested interests who prefer bad taxes and an inefficient economy. Reform is possible, and the benefits profound. Meanwhile, we have a moribund economy, skewered by a speculator mindset and crippling land prices that will eventually revert to mean.

Standing aside is the only rational thing for homemakers to do. The excluded are building their personal balance sheet in other ways – share market, savings, self-education. Those basking in the Ponzi are in for a rude shock when their one trick is found wanting under future economic settings.

Anyone spending a million on a house just renounced being a millionaire.

A very high price to pay to avoid rent.

Don't Buy Now!
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Blondie girl
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The implementing of the GST was supposed to get rid of various taxes , it just didn't happen .... We've got GST on just about everything. :bl:

Land tax when you really consider its goal.. is quite a narrow type of tax that applies to certain people...not really desirable . Charging taxes on non-income & non-spending is really counter productive.

Don't think that abolishing StampDuty is gonna make land cheaper to buy, it currently has no real effect on prices ATM..

We really get taxed enough as it is.. Why do people want to pay a land tax on their own home..?

Tax reform my arse..
Oz is really over taxed....

I do think that..
Stamp Duty is too high ,, but it does the job to reduce short term temptations of real estate speculation, there woulld be more property flipping happening..
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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