In light of the ongoing housing affordability debate and recent calls to abolish stamp duty, one industry figure has called for a review of land tax.
John Cunningham, president of the Real Estate Institute of NSW, says there are many unfair outcomes as a result of the current system.
“REINSW believes that some pegging mechanism needs to be considered during the current market,” he said.
“With property values rising, many property owners and tenants have been presented with land tax assessments that make their business ventures unviable.
“In effect, the state government is compelling people to sell property because they have rezoned it and are taxing it for unrealised potential.”
According to Mr Cunningham, the current land tax system also puts unnecessary stress on elderly citizens.
“There is an adverse outcome for the elderly entering a nursing home only to find that they have inadvertently triggered the land tax provisions which come into effect as a result to changes to legislation which see net rental income from their former home assessed under the aged care means test.
“REINSW also suggests that people who purchase property for land banking purposes, whereby a premises is left vacant intentionally, should pay additional land tax as a penalty for not providing the property for the benefit of the community.”
The recommendations have been issued as part of a review of REINSW’s Real Tax Policy, ahead of the NSW budget later this month.
[Related: Property taxes 'rising at a rapid pace']