PROPERTY TAXES A BIG BARRIER
A SURVEY has found 90 per cent of WA property seekers consider state property taxes a barrier to owning or investing in real estate.
As part of their campaign asking the next State Government to commit to reform state property taxes, including no increase to these taxes, REIWA asked respondents what their biggest concerns and hurdles were to ownership or investment.
The top three issues for the 455 respondents were:
1. Transfer duty, land tax and capital gains tax.
2. Acquiring finance/savings to be able to afford a property. 3. General cost of housing. The transfer duty on a median priced house of $520,000 is $18,715.
Many buyers need to borrow the money to cover this cost and would pay back $33,645 over 25 years at 5.25 per cent, adding $112.15 per month to their mortgage repayments.
President Hayden Groves said the results clearly showed taxes were a deterrent to would-be home owners.
“It shouldn’t be underestimated the impact state property taxes have on the lives of West Australians,” he said.
“Any move from the incoming government to further increase them would make home ownership and property investment less affordable and more difficult.”
REIWA’s second policy reform proposes land tax aggregation rules be abolished.
Individually, the land tax on houses valued at $370,000 and $400,000 is $300 each.
If the properties are owned by one investor, their aggregated value is $770,000, resulting in land tax of $1175.
Mr Groves said three recent consecutive increases in rates, and changes to thresholds, had made land tax aggregation rules a bigger financial burden for property owners.
Respondents were also asked if removing these rules would change their perception of property investment. The results were:
1. 48 per cent said they would invest in more property if land tax aggregation rules were abolished.
2. 23 per cent would be more inclined to start investing in property.
3. 29 per cent would not change their investment decisions.
“These results suggest 71 per cent of respondents would choose property as an investment if aggregation rules were abolished,” Mr Groves said. “The knock-on effect this reform would have on the economy is compelling.
“REIWA scenario analysis shows in the forward years, a lift in sales activity from abolishing aggregation rules would generate more revenue for the State Government from transfer duty and new land tax receipts, over the initial loss from abolishing land tax aggregation.”