Daniel, the Henry Report is due out in a couple of months. If an investment property is a meant as a long term play then a little wait isn't going to hurt.
I think that you're being a bit paranoid about land tax rates. The yet-to-be-announced changes will keep taxation at the same sort of levels, and Henry has stated that he thinks that the architecture of the system is about right. So I don't expect any major changes, and the article that KeithJ linked to pretty much echoed what has been telegraphed in speeches by various Treasury officials.
The US rate of land tax that you cited is around 3.5%. That doesn't mean that any potential Australian version will be at that level. For example, sales tax in the US is 4% to 7.25%, depending on state, versus 15% to 25% in the EU and 10% (GST) in Australia.
A 3.5% rate would correspond to about $17K per annum on an average Melbourne home. That would equate to 20 - 25% of household income (guessing $60K to $80K), and would be a massive tax hike. I can't see that being a popular move...
There's a far bigger risk that tax deductions will be capped or eliminated. Negative gearing and other deductions on property have risen from $600 million in 2001 to $6.4 billion or $11 billion, depending on which figures you take.
My guess is that negative gearing will be constrained in some way (e.g. limited tax write-offs to property income only, and not against overall income), particularly as it's been growing so fast. The tax man abhors a loophole...
I'm not at all bullish about property, and would argue that there are big downside risks. Most posters here would (and have) disagreed with me on that one.
I think that you're being a bit paranoid about land tax rates. The yet-to-be-announced changes will keep taxation at the same sort of levels, and Henry has stated that he thinks that the architecture of the system is about right. So I don't expect any major changes, and the article that KeithJ linked to pretty much echoed what has been telegraphed in speeches by various Treasury officials.
The US rate of land tax that you cited is around 3.5%. That doesn't mean that any potential Australian version will be at that level. For example, sales tax in the US is 4% to 7.25%, depending on state, versus 15% to 25% in the EU and 10% (GST) in Australia.
A 3.5% rate would correspond to about $17K per annum on an average Melbourne home. That would equate to 20 - 25% of household income (guessing $60K to $80K), and would be a massive tax hike. I can't see that being a popular move...
There's a far bigger risk that tax deductions will be capped or eliminated. Negative gearing and other deductions on property have risen from $600 million in 2001 to $6.4 billion or $11 billion, depending on which figures you take.
My guess is that negative gearing will be constrained in some way (e.g. limited tax write-offs to property income only, and not against overall income), particularly as it's been growing so fast. The tax man abhors a loophole...
I'm not at all bullish about property, and would argue that there are big downside risks. Most posters here would (and have) disagreed with me on that one.
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