It’s raining housing bribes! Following in the footsteps of the Turnbull Government’s double trick, the Western Australian Government has promised to give hefty stamp duty concessions to retirees downsizing:
Eligible seniors would pay no stamp duty on new and established homes worth up to $440,000 and receive a concession of up to $15,000 for property valued up to $750,000.
There would also be a concession of up to $10,000 for a vacant lot up to the value of $400,000.
The concession would be introduced at the start of 2018 and initially apply for two years.
To qualify, seniors must be over 65 and selling their existing home.
REIWA and the Council on the Ageing (COTA), which have been campaigning for an exemption for transfer duty for seniors looking to “right size,” welcomed the commitment from the State Government…
REIWA president Hayden Groves said he was thrilled the Barnett Government had committed to easing the burden of transfer duty for seniors.
“Transfer duty creates a significant barrier for seniors over 65 on fixed incomes who are looking to change their lifestyle or downsize,” he said…
COTA WA chief executive Mark Teale said the announcement was positive news, with one in three voters in WA over the age of 60 and seniors making up 19 per cent of WA’s population…
Housing Industry Association Executive director John Gelavis said the policy was a masterstroke in the housing affordability debate and would open up many more housing options, stimulating the home building and infill development industry and the broader real estate market.
As regular readers will know, I strongly oppose stamp duties on equity and efficiency grounds. One of my biggest concerns around stamp duty is that it discourages housing turnover by unnecessarily penalising people that move to homes that better suit their needs. As such, stamp duties inevitably lead to an inefficient use of the housing stock, such as empty nesters occupying large homes with multiple spare bedrooms, or young families cramming into small apartments.
That said, I cannot support abolishing stamp duties for retirees only, whilst continuing to financially penalise young families upgrading to more suitable accommodation. Such age-based measures will unfairly shift the tax burden even further onto the younger generations, burdening the very segment of society (young families) that are arguably already under the most financial strain.
If the Western Australian Government truly wants to encourage housing mobility then remove stamp duty for all cohorts. But don’t create a special class of citizens in the form of home owning retirees, many of whom had the good fortune of purchasing their homes cheaply (and paying minimal stamp duty) before they skyrocketed in value.
In short, why are retirees more worthy of stamp duty relief than young growing families? Such policies should not discriminate.
If the Western Australian Government is concerned about revenue losses from extending stamp duty relief to all buyers, then it should look to replace stamp duties with a broad-based land tax, subject to transitional measures explained here.
