Families could soon bear a bigger burden than just their mortgage, according to talk among government and housing industry representatives.
According to a recent report in The Australian, the Rudd Government is considering a capital gains tax on expensive family homes as part of a larger tax overhaul. The scheme would be aimed at any home valued at more than $2 million, even if it were a primary residence.
Around 4000 homes fell into this category last year, according to The Australian newspaper, with a combined value of $10 billion, and representing only 2 percent of all properties.
Even so, property forecasting firm BIS Shrapnel’s Jason Anderson told The Australian that the federal government could potentially raise $625 million from implementing such a tax.
The newspaper’s report was later dismissed by Treasury secretary Dr Ken Henry, but heated discussions within the industry continue, and last week the federal government continued arguments.
Real Estate Institute of Australia (REIA) president David Airey said he was “aghast at the idea”, and that no GST should ever be applied to family homes.
“Australians pay off their homes with after-tax dollars earned whilst working. They’re entitled to that capital benefit as part of their longer-term retirement plan and to know that their greatest asset is safe from taxation,” Airey said.
However, some experts disagree.
University of New South Wales tax and housing expert Dr Julian Disney told The Australian that the tax-free status favoured the wealthy, and that implementing a tax on high-end property would help increase equity.
“We need an indication that there is no longer an unlimited free lunch for owner occupiers at the top end of the market,” he said.
The Treasury secretary’s report into the Australia’s taxation system will be presented to the federal government in December 2009.