A $10,000 stamp duty discount is being proposed to help Western Australian downsizers move home - while at the same time potentially increase government tax revenue.
The Real Estate Institute of WA (REIWA), which represents the real estate profession, has made a series of stamp duty policy suggestions in the lead-up to next month’s WA State Budget.
Apart from the $10,000 stamp duty discount, the REIWA is also proposing an annual land tax option to replace upfront stamp duty, along with an extension of the State’s off-the-plan purchase stamp duty concession.
REIWA President Damian Collins said while stamp duty was an important revenue earner for the WA Government, the inefficient and inequitable tax was ultimately a handbrake on the economy.
“Stamp duty actively discourages home ownership and makes it significantly more difficult for people to move frequently,” Mr Collins said.
“If there was ever a time for the WA Government to implement bold reform to help alleviate housing affordability pressures on West Aussies, now is it.”
Below are the details of the suggest changes:
1. Introduce a two-stream revenue collection method for stamp duty
REIWA is pushing the WA Government to introduce a two-stream revenue collection model for stamp duty, which gives purchasers the option to pay the tax upfront (as is currently the case) or opt for an ongoing annual fee, calculated at the purchase price of the property.
The reform would allow someone buying a $500,000 property to choose to pay $17,765 upfront, or a $1,000 a year annual land tax.
“Introducing a two-stream revenue collection method for collecting stamp duty would encourage people to move more frequently, resulting in far greater housing efficiency,” the REIWA said in its pre-budget submission.
“Some seniors with large homes might consider downsizing or ‘right-sizing’, freeing up larger homes for younger families.”
In a 2020 survey conducted by REIWA of more than 1,000 people, 60 per cent said they would opt for an ongoing annual fee if given the choice.
Already the Australian Capital Territory has implemented the progressive replacement of upfront stamp duty with an annual land tax. NSW is currently considering this issue as well.
SEE AN INTERVIEW WITH THE REAL ESTATE INSTITUTE OF WA'S JOE WHITE BELOW
2. Provide immediate $10,000 stamp duty relief for those aged 65 and over
REIWA is calling for the WA Government to immediately provide a $10,000 stamp duty concession for all people aged over 65.
In its pre-budget submission, the organisation said the measure could be cost-neutral, or even net the government higher revenue, because it would encourage greater housing market churn and activity and therefore increased stamp duty payments.
“Stamp duty prevents many seniors from right-sizing into more suitable accommodation. Many either struggle to raise the upfront costs or are deterred from spending a large sum to move home,” the organisation’s president Damian Collins said.
“Targeted stamp duty relief for seniors would assist with these upfront costs and help them to right-size into more suitable accommodation, which would free up housing stock and assist with mobility across the whole market.”
3. Lock in the off-the-plan stamp duty rebate
With one-third of all unit purchases in 2020 estimated to be off-the-plan, REIWA is calling for the WA Government to lock in the stamp duty rebate for off-the-plan purchases, which is due to expire in October 2021.
"It is vital that the off-the-plan stamp duty rebate becomes a permanent feature of WA’s property tax system. Incentivising the purchase of multi-unit dwellings will ensure ongoing construction work while reducing urban sprawl and encouraging infill development," Mr Collins said.
“The current 75 per cent stamp duty rebate for off-the-plan construction apartments has been essential in ensuring an ongoing pipeline of projects.
“We believe that without this ongoing incentive, the demand for apartments will soften, impacting the steady supply of diverse housing and the creation of jobs for West Australians."
Comment from our CEO
Downsizing.com.au CEO Amanda Graham welcomed the REIWA’s proposals, saying they were attractive to consumers and would also act as an important economic stimulus, both in terms of the residential property market and more broadly through other spending as a result of older home owners cashing in some of their home equity.
“We know that potential downsizers currently hold the majority of housing equity, but stamp duty acts as a significant barrier and is preventing many people from moving,” Ms Graham said.
“Off the plan apartments in particular are very attractive to empty nesters and downsizers thinking of selling up the family home, as they are looking for modern, well located properties.
"It’s encouraging to see WA having a constructive policy debate on these issues.”
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