A new tax is being advocated by The Grattan Institute – and I’m telling you now, you’re not going to like it!
The Grattan Institute, which is an independent think tank dedicated to developing quality public policy solutions for Australia’s future, is proposing a new tax on property owners.
Aimed at raising $7 billion a year, the property ‘levy’ they are advocating for would be charged at 0.2%, or $2 per $1,000, on the unimproved value of every home in Australia.
It would be attached to your council rates valuation, and so would essentially be payable on your land value.
It’s estimated that the annual charge would be around $772 on the median-priced Sydney home, $560 on the median-priced Melbourne home, and less in other cities and regional areas.
You can’t say I didn’t warn you; I said you wouldn’t like this news!
Note that this is by no means a sure thing; it’s not even officially on the table. It has simply been proposed by the Grattan Institute, but they have proposed a number of tax initiatives to do with property over the years that have never come to fruition.
And on a positive note, their working paper argues that the levy could be used to fund the reduction and eventual abolition of stamp duties, which they describe as being “the most inefficient and inequitable state taxes”.
No-one likes the idea of a new property tax. It’s hard enough as an investor these days to come up with a 20% property deposit, let alone add extra fees and costs to the equation. But if this is a measure that paves the way for stamp duty to be eliminated, then I think that’s a move we can possibly get behind?
Over to you: what would you prefer? A small property levy charged on an annual basis? Or is a hefty upfront cost in the form of stamp duty an easier way for you to manage your property investing budget?
Til next time, happy investing!