REIV Presents Budget Ideas to the State Government

The REIV has presented its Budget submission to the Victorian Government, calling for a reduction in property taxes, increased assistance for first home buyers and improvements to land tax.

The REIV has presented its Budget submission to the Victorian Government, calling for a reduction in property taxes, increased assistance for first home buyers and improvements to land tax.

REIV CEO Enzo Raimondo said that this Budget presented the state government with an opportunity to review the taxation of residential, commercial and industrial property transactions.

Residential property taxes are higher than ever before and higher than in any other state. Home buyers pay the highest stamp duty, property investors can be taxed twice and businesses investing in property are often charged taxes on taxes in the form of stamp duty on GST.

"Later this year the Federal Government's Tax Summit will be held. The Henry Review recognised that stamp duties were an inefficient and ineffective mechanism to raise revenue. Whilst the REIV does not support the proposed replacement of increasing land tax, it does indicate that property taxes will be on the agenda.

"Prior to the summit, however, improvements can be made to Victoria's property taxes in the Budget for 2011-2012.

"REIV research shows that first home buyers require continuing assistance. In February the government assisted 2,153 with grants - that's 131 per cent lower than the peak of 4,981 just under two years ago. The reduced numbers are a direct result of decreasing affordability.

"First home buyers will be looking forward to the 20 per cent cut in stamp duty promised before the election and due to be applicable from 1 July.

"It is also timely to review land tax, particularly the 'tax on tax' component. Since 2000 many purchasers of commercial and industrial property have been forced to pay stamp duty on not only the actual property but the GST! This represents an extra $10,000 on a transaction valued at $2M.

"Twenty years ago stamp duty represented about 3.4 per cent of the purchase of a median-priced home; 10 years ago it was 4.5 per cent and now it is 5.2 per cent.

"Stamp duty rates should be indexed to account for inflation," Mr Raimondo concluded.

Real Estate Institute of Victoria
www.reiv.com.au