The debate over stamp duty is an ongoing one, with opinions divided and the likelihood of change still seemingly a long way off. In a recent online article, the Real Estate Institute of Victoria (REIV) reviewed where the tax actually comes from, in a broad geographical sense.
The REIV figures used in the blog were based on transactions in 2006. They showed that the average stamp duty bill for a home within 10km of the CBD was $36,060 compared to $23,038 for the middle ring of suburbs between 10 and 20km from the CBD. For homes greater than 20km from the CBD the average was $14,269.
However, due to the higher number of dwellings in the outer suburbs, they contributed a greater share of the total revenue – 39% – than the middle suburbs with 32% and the inner city at 29%.
There were 174,000 residential land plots in the inner city, 348,000 in the middle suburbs and 512,000 in the outer suburbs.
These numbers reflect the fact that the underlying land value of the homes in the inner city is higher than for those in the outer suburbs and, as stamp duty increases in line with the sale prices, higher valued land pays more.
The REIV, like most industry experts, as well as the average home buyer, are keen to see tax reform in this area. It would assist first home buyers and help to promote investment in Victoria.
REIV CEO Enzo Raimondo believes that it is a pertinent time to reform the structure and level of property taxes to improve equity, remove double taxation and promote investment. “The current structure of property taxes in Victoria is inefficient and discourages the necessary investment in housing and commercial property,” he says. “Residential home buyers are subject to bracket creep when prices rise, leading to an increasingly high level of taxation. This not only results in a higher level of stamp duty for every dollar spent on a home but also discourages some people from relocating.”