“Our current rules on taxing the family home are nothing short of dumb,” says Associate Professor Dale Boccabella from the UNSW Business School. "There is currently an open-ended and uncapped exemption from capital gains tax on the sale of the family home. The current rules stack up very poorly on any objective tax policy analysis, especially on the all-important fairness or equity criterion. Why do we continue to put up with this treatment?"
UNSW’s Dale Boccabella says it is time to start a debate over the desired tax status of homes.
“At the moment, the income tax system effectively, and incorrectly, characterises a home as an item solely of private consumption, and this characterisation is then used to justify or normalise the current tax-free status of owner-occupied homes."
We need to recognise reality, he suggests. “Certainly a home is used for private purposes, but it is not consumed in the process, and most homes appreciate in value. In addition, investment type considerations are brought to bear on the purchase decision concerning a home.”
Therefore he says the classification of a home as a 100 per cent private asset defies what is really going on. “Few, if any credible analysts view an owner-occupied residence solely as a private good. It is a major asset for many people and has investment features to it."
Associate Professor Dale Boccabella from the UNSW Business School adds that he is not suggesting full taxation, with the complete removal of exemption, of family homes. But he is suggesting a more nuanced or sophisticated approach to their taxation. "It should not be beyond us to devise a sensible policy that better balances competing interests."
Dale Boccabella can discuss taxation on the home, and why he feels change is overdue.
“In the end, the bald assertion that one’s home is a private matter and therefore should not be taxed is not only wrong, it is a poor substitute for proper tax policy analysis,” he says.
For further comment call Dale Boccabella on 02 9385 3365, 0427 591208 or email firstname.lastname@example.org
Media contact: Julian Lorkin: 02 9385 9887