wealth tax

‘Unprecedented growth in house prices’: OECD calls to cap tax breaks benefitting the rich

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Capping tax breaks for housing could help reduce house prices and ensure that property is not concentrated in the hands of older and wealthier Australians, according to a new report by the Organisation for Economic Co-operation and Development (OECD).

The report suggests that capital gains tax exemptions can disproportionately benefit higher-income and wealthier households and drain government budgets.

In Australia, there is no capital gains tax on a person’s principal place of residence and the tax levied when someone sells an investment property is heavily discounted.

One of the OECD’s recommendations to governments, including Australia’s, is to “consider capping the capital gains tax exemption … to ensure that the highest-value gains are taxed”.

It suggests this could “reduce some of the upward pressure on house prices”. 

The estimated cost of the capital gains tax exemption for main residences was $64 billion in 2021.

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