If you have ever been involved in the property market you have likely paid stamp duty, but recently there has been growing calls for the tax to be axed.
First of all what is stamp duty?
Stamp duty is a tax paid on the transfer of land or the sale of a property. It is usually paid by the buyer – though there are some exemptions and concessions in some states – and is calculated either at a set rate or as a percentage of the total sale, depending on where the transaction took place.
Each state has a different rate of duty applicable to different types of property and was slated to be scrapped when GST was introduced in 2000, but remains to this day.
Should it be scrapped?
There are growing calls for the tax to be scrapped – from leading home builders, industry heavyweights and even the federal government, which labelled stamp duty “highly inefficient and inequitable” in its tax discussion paper earlier this year.
The HIA advocates the removal of stamp duty on property transactions and says axing the tax will benefit the housing market as a whole. It will likely lead to more new homes being built, which is essential to house Australia’s growing population.
Stamp duty currently adds thousands of dollars to the average mortgage and many home buyers have to borrow additional money to meet the tax payment, increasing their long-term mortgage repayments.
It’s a highly inefficient tax.
Leading home builder AV Jennings also recently called for stamp duty to be scrapped, with chief executive Peter Summers saying doing so would encourage more first home buyers into the property market.
What do you think? I would live to hear your thoughts on the matter?