The housing industry has welcomed the government’s statement that there will be no changes to the capital gains tax (CGT) on housing.
According to HIA deputy managing director Graham Wolfe, a range of proposals were put forth by the government last year regarding new housing, from reducing CGT on investment properties to applying the tax on the family home.
Mr Wolfe said last week’s categorical statement by the government that no changes will be made to the CGT provides “continued certainty to the industry and to investors”.
“The housing industry has opposed changes to the way capital gains are currently treated on investment properties,” Mr Wolfe pointed out. “It would mean investors pay even more tax.”
Mr Wolfe pointed out that currently, around two dollars out of every five that an individual pays for a new home is tax.
“Buyers pay those taxes. And then they pay taxes on the taxes. They pay stamp duty on top of taxes, including the GST. And when they eventually sell the property, if they make any money, they pay tax on that,” he said.
“Housing cannot be asked to pay even more taxes. It would simply have the opposite effect,” he stressed.
When it comes to improving housing affordability, Mr Wolfe emphasised that the focus should be on increasing supply year-on-year.
“This won’t happen by removing the incentives to build new homes and placing pressure on existing housing prices to meet demand,” he concluded.
[Related: Capital gains push higher in August]