I can't believe people would still vote Labour. The proposed $3m cap is NOT INDEXED. This will effect basically everyone IMMEDIATELY one way or another. In Sydney Inner City, Inner West & East, $2m is already a typical (entry) level home price. These same "politicians" go on and on about housing affordability and talk about old people not moving out of their home. You have lots of 4 bedroom homes that are occupied by elderly couples and widows, the politicians/media almost makes them out to be self fish as they should be downsizing. Really? Downsizing? What a perfect way to donate to a useless Government! Say a property is sold for $3.5m and a "downsize" property is bought for $1.5m. The sale is tax free (principal place of residence). Agent & marketing, approx $60k gone Stamp duty on purchase, $65k gone Moving costs $10k, legals $5k.
That's $140k so far, no biggy, $1.86m left.
Believe or not, a lot of these elderly people in $3.5m homes are not wealthy. The house price is just a result of inflation from when they bought it 40 years ago for $70k. Most had low skilled work , have very little to no super and have some cash savings but rely on the government pension.
A pensioner couple would receive up to $1500 per fortnight, say $40kpa. If they were to downsize, they would loose this and become self funded.
We are currently in a high interest environment where they could earn 4% and it seems like a no brainer, but not too long ago, term deposit were paying less than 1%.
With $1.84m in savings, an interest rate of at least 2.2% would need to be earned to have the same cashflow and have the privilege of living in a smaller dwelling and moving away from all the neighbors you've known for 40 odd years. For simple folk who already have everything they want, $1.84m in a bank account doesn't excite them much (but yet, they play Bingo?). And for their beneficiaries, well if they hang around for 10 more years, that $3.5m house will probably be closer to $7m, that downsize property might be $3m and the cash in the bank still $1.8m. There is an overall $2m+ incentive to stay put for 10years.
Well, now consider those more skilled retirees who already have super and are self funded. If they were to downsize and put extra money in their super, they would breach the $3m cap straight away, hence would stay put, even if they were contemplating downsizing.
The proposed legislation is a joke. It will make the already slow down-sizer progress non-existent. It will encourage people to invest in property outside of super where unrealised gains will not be taxed.
Voting for Labour and supporting the tax on super is voting for housing inequality, higher property prices, property investors, less down sizers.
Take a step back and join the dots. Everything has knock on effects.
If less money goes to super, more money will go to housing.
Construction costs are ridiculous, red tape is ridiculous & the NIMBY agenda is as strong as ever. Any money diverted to housing will go into EXISTING housing, not new. This will only drive up prices and create greater disparity between owners and renters, especially in established areas.
