Taxes ‘keep­ing in­vestors out of the prop­erty mar­ket’

Western Suburbs Weekly - - News -

NINETY per cent of WA prop­erty seek­ers con­sider state prop­erty taxes a bar­rier to own­ing or in­vest­ing in real es­tate.

As part of its cam­paign ask­ing the next State Gov­ern­ment to com­mit to re­form state prop­erty taxes, in­clud­ing no in­crease to these taxes, the Real Es­tate In­sti­tute of WA sur­veyed re­spon­dents and asked 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.

REIWA 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: Forty-eight per cent said they would in­vest in more prop­erty if land tax ag­gre­ga­tion rules were abol­ished.

Twenty-three per cent said they would be more in­clined to start in­vest­ing in prop­erty.

Twenty-nine per cent said they 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.”

Source: REIWA

Hay­den Groves

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