The State Government feels it’s time to play Robin Hood by slapping “rich” people, land owners and developers with more property taxes.
59% of State revenue already comes from the property industry but I guess this isn’t enough.
We already have more speeding and red light cameras than any other city in the world so that must make up the other 31%…
In our market place where $2,000,000 now buys you a three bedroom single front without parking, most buyers will be subject to the premium stamp duty tax of 6.5% from the 1st July.
Sure, it’s only an additional 1% of the value above $2,000,000 but when you’re already paying $110,000 in stamp duty at $2,000,000, an extra $10,000 or $20,000 just adds more sting to the transaction – and therefore more friction to moving.
And the ‘windfall’ tax, which will hit investors and developers with a tax of 50% of gains above $500,000 will no doubt put a huge dampener on new developments.
The risk / reward equation will no longer stack up for many multi year projects that rely on the occasional big win to cover all those other developments that don’t turn a profit or even make a loss.
Land tax, already higher in Victoria than any other state, is also getting hiked.
No one’s heart bleeds for the uber rich, tax avoiding property tycoons with their AMG63s, however, there are plenty of modest, tax paying folk who inherit a family home and can’t afford to keep it as the annual land tax bill is exorbitant.
Understandably, the new taxes have been poorly received by the property industry, which (staggeringly) employs one in four Victorians.
One in four. No wonder everyone in Melbourne talks about property all the time… If you’re at a dinner with eight people, odds are that two of them work in the industry (probably the loudest two at the table).
The market, hot as it may be, is fraught with uncertainty. It always is. But these new taxes will only add to the uncertainty.
And as Benjamin Franklin said in 1789, “In this world nothing can be said to be certain, except death and taxes.”
Feature image: 38 Closeburn Avenue, Prahran
David Sciola 