Why are Australia's house prices going crazy? Talk about estate tax today
"Chinatown"-Official media of Chinese Australians
As of June 2015, the Australian government's fiscal deficit may have increased to 6 billion Australian dollars (approximately 404 billion yuan), much higher than the May estimate of 2054 billion Australian dollars. It can be said that the Australian government is already heavily indebted. That's why the Australian government would not have the idea of imposing an inheritance tax. Since Australia abolished the inheritance tax in 298, this tax has disappeared in Australia forever.
Australian inheritance tax
Like most other countries, Australia also had an inheritance tax in the past. Out of consideration for national finances, Australia began to levy inheritance taxes during World War I to replenish military capital.
After the war, because the inheritance tax was not popular in Australia, nor could it play the role of "promoting social equity" or "adjusting the gap between rich and poor", the Australian Federal Government finally abolished the inheritance tax in 1978. After 1992, the Australian states completely abolished the estate tax, which made Australia the first rich country in the world to abolish the estate tax.
Why inheritance tax cannot regulate social equity
Zero inheritance tax
After Australia’s inheritance tax was abolished, it encouraged entrepreneurial spirit and individual initiative, and also attracted a large number of foreign immigrants and investors to invest in Australia. At the same time, it has stimulated the development of the Australian real estate market. People no longer care about being exploited to the bones by the government after death. They have put money hidden in their shoes and pillows out for investment.
There are also essential differences between Australian property rights and Chinese property rights. Real estate in Australia is not a small property right. The homeowner has property rights to the property and land, and the holding period is permanent.
With zero inheritance tax and freehold property rights as a guarantee, real estate investment in Australia can truly be passed on from generation to generation.
Q: What if the policy changes and an inheritance tax is added and there is no freehold property right?
A: Do you change when the Australian law changes? . . If you want to increase taxes, you have to ask the parliament and ask the people if they are doing it. It is almost impossible to change these two laws in Australia, and no one dares to propose it.
With the support of laws and policies, Australian real estate has been developing steadily over the years. In the past few years, due to the increase in overseas investment and the increase in immigration, real estate has begun to explode. In cities such as Sydney and Melbourne, house prices in some places have doubled in almost two or three years, which is very scary.
Although there is no inheritance tax, it does not mean that you can inherit the inheritance of your elders without spending a dime. If the inherited real estate is sold and profits are generated, the Australian government will collect capital gains tax.
Capital gains tax, or CGT for short, is simply a tax on the gains from buying low and selling assets (capital gains refer to the selling price of assets minus the cost of acquiring and maintaining assets). Not only real estate, CGT includes stocks, bonds, precious metals, etc.
Capital gains tax is not an independent single tax, but is incorporated into the personal income tax system. For non-Australian overseas investors, the capital gains tax is relatively high, and some states may reach as high as 45%, so immigration first is king.
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