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Taxes add ‘tens of thousands of dollars’ to new home costs

Taxes add ‘tens of thousands of dollars’ to new home costs

The residential building industry is plagued by “excessive and inefficient” taxation that goes beyond purely just stamp duty, according to the Housing Industry Association.

HIA chief executive of industry policy and media Graham Wolfe said in some states the total tax bill amounts to over 40 per cent of the final price of a new home.

“There is no question that stamp duty is one of the key offenders, with research undertaken last year for HIA by Independent Economics identifying it as the most inefficient tax in Australia’s entire taxation system,” he said.

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“However, there are many other taxes on new homes, including developer infrastructure levies, which can be over $70,000 on a new house and land package, and which unfairly require new home buyers to fund community assets upfront.

“Equally, GST is levied on new homes but not existing properties. Adding tens of thousands of dollars on a new home, GST creates a price differential between new and existing residential properties, which hits affordability, supply, employment and economic activity.”

Mr Wolfe noted affordability is further eroded by the effect of “taxing taxes”, whereby a tax such as stamp duty is levied on an amount that already includes a range of other costs.

“GST on infrastructure levies alone can add more than $5,000 to the final cost of a new home, while stamp duty on the total cost of GST adds around $3,000,” he said.

“Infrastructure changes, GST and stamp duty add $140,000 and more to the cost of a new home in Sydney, while a plethora of other taxes, levies, fees, changes, rates and duties take the total tax grab to over 40 per cent of a new house and land package.”

Taxes add more than $250,000 to the price of a new home in Sydney, accounting for 40 per cent of repayments for the life of a home mortgage, according to Mr Wolfe.

“Incredibly, in supplying shelter for Australians, residential building contributes 13 per cent of all GST revenue collected by the Commonwealth. Sadly, that taxation revenue drives up the cost of housing,” he concluded.

Taxes add ‘tens of thousands of dollars’ to new home costs
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