Improving opportunities and equity in home ownership through the tax system
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Housing affordability and equity within the housing sector is currently subject to a high level of media coverage and political debate. The controversy centres on difficulties for young households trying to purchase their first house at a time when the wealth of many home owners has grown dramatically with rising house prices. Despite the media attention, there is relatively little recent research into addressing the growing inequity in housing wealth. This paper seeks to redress this imbalance. Current taxation and tax expenditures on housing in Australia are succinctly reviewed, followed by discussion of the so-called ?crisis? in housing affordability and the various measures that have been proposed and/or implemented to date. The main parts of the paper present proposals for a taxation offset for first time home buyers and the application of capital gains tax to higher valued owner-occupied housing. Initial estimates of the overall net tax revenue implications of the combined proposals are presented, and show that after five years the overall package is about revenue neutral. This compares well with the current high transparent and hidden subsidies to all sectors of the Australian housing market. The main challenges in implementation are considered, followed by some concluding comments and suggestions for further analysis.
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Barrett, G.; Cigdem, M.; Whelan, S.; Wood, Gavin (2015)Home ownership represents an important social and economic cornerstone of Australian society. In addition to providing security of tenure, ownership has represented an important savings vehicle by which Australians can ...
Cigdem, M.; Wood, Gavin; Ong, Rachel (2015)This Positioning Paper is the first output of a project that aims to forecast future housing subsidies that will accompany projected demographic changes and the challenges these trends may pose for the fiscal sustainability ...
Barrett, G.; Cigdem, M.; Whelan, S.; Wood, Gavin (2015)As house prices in Australia have increased, concern has been expressed about the ability of young Australians to attain home ownership. In August 2014, for example, the proportion of all mortgage financed dwelling ...