Up until now we felt safe knowing that when we sell our family home there was no Capital Gains Tax involved.
But that may change for some homeowners.
Former tennis star John Alexander, who is chairing a House of Representatives inquiry into housing affordability, believes homeowners who net steep windfall gains from homes that are rezoned should be taxed to fund local improvements.
In the past two years swags of homeowners — particularly within Sydney’s middle ring suburbs — have earned up to five times the value of their homes after they were designated for railways or apartments.
Much the same has happened in Melbourne and Brisbane where zoning changes allowed higher density developments, sometimes enabling neighbours to amalgamate their sites, selling together to a developer and “winning the lottery.”
Mr Alexander was reported in The Australian as saying:
“Our growth is being limited by the fact we’re outgrowing infrastructure.
“Under a value-capture system those people who have had wonderful windfalls would be asked to contribute to infrastructure, that’s something I believe the average Australian would find fair.”
“Extraordinary unearned benefits have been taken by homeowners located close to planned transport hubs.”
State governments like the idea
Mr. Alexander is now working at both a state and federal level on an ambitious proposal — known as “value capture” — that targets homeowners reaping “unearned benefits” when planning decisions dramatically lift their home prices.
This could mean residents cashing in could face a levy that operates similar to a capital gains tax.
I can see this proposal causing quite some outcry…watch this space.