A University of Tasmania paper has suggested property tax increases could be used to cover the abolition of stamp duty over the next decade.
The paper, led by University of Tasmania professor Richard Eccleston on behalf of the Australian Housing and Urban Research Institute, was the key topic of discussion at the National Housing Conference in Sydney on Thursday.
It proposed a single 6-per-cent transfer duty, with a duty-free threshold, be applied to residential property transactions.
The transfer duty would be reduced by 10 per cent over 10 years.
An analysis revealed a modest annual property tax increase of $47 a year in Tasmania could fund the gradual reduction.
The paper argued the simplified duty system would remove costs from owner-occupiers who bought low-value properties and place more burden on investors who purchased high-value properties.
“Shifting the costs incurred by transfer duties from owner-occupiers to investors will help meet housing policy goals by dampening demand for investment properties and increasing home ownership rates,” the report said.
Professor Eccleston said the proposed reform in the report made sure tax increases were modest.
“It is unavoidable that, over the longer term, some households will have to pay slightly more tax,” he said.
“This is a small price to pay for a fairer and more sustainable housing system.
“All homebuyers, including first-home buyers, will benefit from lower prices in the future and those buying cheaper properties will pay reduced ongoing property taxes.”
In Tasmania, a person who purchases a property at the state’s median sale price of $283,000 can expect to pay $9335 in transfer duties.
The state has forecast it would receive $246.8 million in conveyance duties this financial year.
The paper said before any change, there needed to be nationally consistent valuation methods for residential properties.