There will be a myriad of issues debated at this week’s Tax Forum but top of the wishlist for many experts is reforming housing taxation.
Housing makes up the lion’s share of household wealth in Australia. The Australian Bureau of Statistics estimated in 2007 that about 45% of household wealth is in home ownership, and another 15% is in investment housing.
People access housing in different capacities: as home owners, landlords and renters. Australia has a fairly high and stable rate of home ownership by global standards.
About 70% of Australian households (individuals or families) own or are purchasing their own home; 22% rent in the private rental market and 5% rent in public or social housing.
However, these averages mask some worrying trends, as younger people find it more difficult to access home ownership, our cities sprawl and services become more expensive, and older people carry mortgage debt for longer than ever before.
This year, the National Centre for Social and Economic Modelling (NATSEM) confirmed previous findings that Australia has one of the least affordable housing markets in the OECD. We have severely unaffordable areas in most cities and in regional and rural areas.
A complex mess
Housing is affected by many different taxes in Australia, leading to a complex mess of federal, state and local taxes, exemptions and concessions.
Home owners benefit from many tax exemptions. Most home owners pay rates to local councils, but home owners do not pay any land tax, or any capital gains tax on the sale of their home.