What’s the scam with the mansion flipping epidemic? Are the profits tax-free if you flip your three storey pad before you live in it? And what if you buy the property next door and amalgamate it into your primary residence?
There is no evidence the Tax Office is doing much about either rort as wealthy house-flippers in the leafier suburbs of Sydney and Melbourne notch up large tax-free profits during the housing crisis. (Although they are cracking down on profits from people’s hobbies.)
The Howard government’s CGT tax break coincides with the sharp rise in Australian real estate prices versus wages.
Here are the winners:
See how the benefits of this tax lurk fall to those who least need it?
And here are the losers:
See how house prices began to sharply diverge from average incomes around 2000? That was when the CGT tax breaks for selling the ‘family home’ were introduced.
Obsessively sycophantic media coverage of the mansion flipping craze is evident daily in the mainstream media yet despite the daily eulogies to rich people amalgamating $20m properties and ‘moving’ mansions, sorry ‘family homes’ up to four times in the last ten years, the subject of CGT rorts is never tackled. Funny that. along with negative gearing, money laundering reform failure and other factors such as a foreign buying deluge, it’s driving up both the price of residential property and rents as well.
This from Harry Chemay tackles the details of what went wrong and how to fix it.
Songbirds and snakes. How to end the ‘Hunger Games’ of housing affordability
Meanwhile, “Australia will fall 90,000 homes short of this year’s national target of 240,000 new dwellings, affordable housing industry figures have said after new housing starts for 2023 came in at the lowest level in 11 years.
Dwelling commencements over the last calendar year undershot the national cabinet total by almost one-third, falling to 163,836, Australian Bureau of Statistics figures showed on Wednesday. This was the weakest since the 2012 total of 153,580”.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.