Terry’s View – Investors Don’t Get the Best Tax Advantages

Despite what many would have us think, the property buyers who get the best tax advantages in Australia are not investors.

There’s a different type of buyer who is massively advantaged by the taxation system and are causing home prices to rise – First Home Buyers (FHBs).

FHBs are very active in the market right now, driven by government incentives, which is driving up property prices.

FHBs are massively advantaged because of two Federal schemes, one of which means they only need a 5% deposit to buy and they won’t have to pay Lenders Mortgage Insurance.

The other federal scheme only requires a 2% deposit. No other type of buyer has this enormous advantage. Other buyers and investors have to come up with a 20% deposit or pay a significant sum for LMI.

FHBs also have access to State Government schemes with grants and stamp duty concessions, which can equate to tens of thousands of dollars.

There are no grants for investors.

FHBs pay no land tax or capital gains tax when they sell and they pay lower council rates than investors, who contribute more than $100 billion every year to government coffers in land tax, stamp duty, capital gains tax and council rates.

Mum and dad investors provide more than 90% of the 3.5 million rental homes in Australia.

I’m not saying that FHBs shouldn’t be given some help to get into the market but those advocating to remove tax benefits are very wrong in thinking that it will fix Australia’s housing crisis and make housing more affordable. The only impacts will be negative – particularly for tenants.