Taxes – they've been called everything from evil to… a necessary evil. But how much of government revenue is made up by the taxes you pay when purchasing real estate?
According to CoreLogic RP Data, nearly $50 billion. This comes from 8 May analysis of Australian Bureau of Statistics data, and perhaps is why talk of stamp duty never seems to turn into legislation. But with Victoria recently introducing unprecedented cuts to this tax measure, let's look at duties for Gold Coast real estate and how much you could pay.
As the Queensland Government points out, stamp duty rates for local real estate are fairly straightforward. Properties up to $540,000 in value incur a set stamp duty fee of $1,050. Above this and up to $1million it's $17,325, and above this it's $38,025. There are also stepped fees ($3.50, $4.50 and $5.50 respectively for every $100 the value is above the benchmarks).
Okay, it is a little more complex than you may have thought. Let's use some specific Gold Coast property values to work it out more clearly.
CoreLogic's latest monthly indices show that for Brisbane and the Gold Coast, the median unit value is $398,550. Using the Qld Treasury's calculator estimates, owner occupiers would pay $5,197.50 in transfer duty and investors would pay $12,732.50.
Meanwhile, the median house value is $556,110. Using the same calculator, an owner-occupier would pay $10,879 in duty and investors would pay $18,054. Buying above the million dollar mark immediately sets your transfer duty around $35,000.
Essentially, stamp duty is tiered – the higher the value of your home, the more tax you are going to have to pay. Considering the volumes, it's an important cost to factor into your investment (or ownership) plans. But how much of the government's coffers does this line?
The exact figure for tax on property that governments collected in 2016 was $49.567billion. This set an incredible new record, as it made up 51.9 per cent of all revenue generated by state and local governments last year.
This is surely a reflection on incredible activity in the real estate market, but also points to government reliance on property taxes to stay afloat. Should the property market falter or plateau, how will revenue keep rising to meet increasing costs?
It's also important to remember that stamp duty isn't the only property payment we make to governments. Land tax and municipal rates play their part in a huge way. In 2015-2016, approximately $20billion of all property taxes came from stamp duty, just under $17billion from municipal rates and around $7billion from land tax. According to CoreLogic's Cameron Kusher, the inherent volatility of the property cycle means stamp duty is actually quite unreliable for governments to depend on for revenue, and there needs to be a shift in the balance.
"For this reason, it would make sense to move from stamp duty to a much more efficient, easier to collect and holistic land tax," he noted in the 8 May article.
While Victoria and New South Wales were responsible for the vast majority of this revenue, Queensland nonetheless produces some $3billion in real estate tax every year. How much of that do you pay?
If you're looking to buy on the Gold Coast and want to know more about the hidden costs and how much they will be, get in touch with the team at Ray White Surfers Paradise.