With reiwa.com data showing that home owners are holding onto their properties for longer than 20 years, in many cases due to the hefty costs of stamp duty, REIWA welcomes the West Australian Liberal Partys commitment to a state tax reform, whichwill enable people to move more freely and help boost WAs economy.
REIWA President Damian Collins said stamp duty is the single biggest hurdle for prospective home owners and a reform is urgently needed to help recover from the impacts of COVID-19.
We need a tax system that will help remove barriers to mobility and home ownership, whilst also providing a smarter model to deliver more consistent government revenue in the long run, Mr Collins said.
Impact on government income
From an income perspective for the government, property transactions are expected to be lower for some time due to the impacts of COVID-19.
This means the proportion of revenue the government generates from stamp duty is likely to be at the lowest levels in at least 15 years, Mr Collins said.
According to Deloitte, removal of stamp duty could lead to a 60 per cent uplift in transactions, generating an additional $1 billion to the economy. There has never been a better time to take this step.
Impact on buyers
For a property worth $500,000, stamp duty is estimated to approximately cost the owner an additional $18,000 and with many buyers including this cost as part of their mortgage, this is a significant deterrent for many West Aussies from moving home.
Over a 20 year period, not everyone will have the same need for their property as they did when they purchased it, which is why people need to be able to right size their properties to suit their lifestyle purposes, without being taxed a large amount of money to do so, Mr Collins said.
With a broad-based tax system, payments will be made over a longer period, allowing those who need to move, the ability to do so while ensuring those who have paid stamp duty are not unduly hit by the replacement tax.
With other states looking at stamp duty removal in detail, WA needs to ensure it is not left behind and should lead the way with a state tax reform.