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The Equity of Alternative Policies for the Australian Homeowner

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  • D. M. KIEFER

Abstract

The income‐tax treatment of homeowners and renters is an important instrument of national housing policy. Major changes in the treatment of homeowners occurred in 1975 and 1976; the second change focused especially on the problems of first‐buyers and was coincident with an expanded home‐savings grant scheme. As a further reform several writers have advocated the taxation of the rent imputed to homeowners. This paper develops a user cost of capital approach to estimate the distribution of housing costs along the income scale and between policy alternatives. The model indicates the vital importance of accounting for inflation whenever physical housing costs are inflating but mortgage costs are fixed in nominal terms. Although inflation is increasing housing costs at all income levels, high‐income homeowners appear to be suffering the greatest cost increases as the result of inflation. Furthermore, unless mortgages are indexed, the customary imputed‐rent formula is regressive.

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  • D. M. Kiefer, 1978. "The Equity of Alternative Policies for the Australian Homeowner," The Economic Record, The Economic Society of Australia, vol. 54(1), pages 127-139, April.
    • Handle: RePEc:bla:ecorec:v:54:y:1978:i:1:p:127-139
    DOI: 10.1111/j.1475-4932.1978.tb00321.x
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    References listed on IDEAS

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    1. B. F. Reece, 1975. "The Income Tax Incentive to Owner‐occupied Housing in Australia," The Economic Record, The Economic Society of Australia, vol. 51(2), pages 218-231, June.
    2. Peter L. Swan, 1976. "Income Taxes, Profit Taxes and Neutrality of Optimizing Decisions," The Economic Record, The Economic Society of Australia, vol. 52(2), pages 166-181, June.
    3. Reece, B F, 1975. "The Income Tax Incentive to Owner-Occupied Housing in Australia," The Economic Record, The Economic Society of Australia, vol. 51(134), pages 218-231, June.
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    Cited by:

    1. Gavin A. Wood & Peter A. Kemp, 2003. "The Taxation of Australian Landlords: Would the British Tax Treatment of Rental Investments Increase Tax Burdens if Introduced in Australia?," Urban Studies, Urban Studies Journal Limited, vol. 40(4), pages 747-765, April.
    2. Judith Yates, 1982. "An Analysis of the Distributional Impact of Imputed Rent Taxation," The Economic Record, The Economic Society of Australia, vol. 58(2), pages 177-189, June.
    3. Gavin Wood & Rachel Ong & Melek Cigdem, 2016. "Housing Tax Reform: Is There a Way Forward?," Economic Papers, The Economic Society of Australia, vol. 35(4), pages 332-346, December.
    4. J. W. Nevile & B. Tran‐Nam & J. Vipond & N. A. Warren, 1987. "A Simple Model of Recent Changes in the Residential Property Market," The Economic Record, The Economic Society of Australia, vol. 63(3), pages 270-280, September.
    5. Roslyn Anstie & Christopher Findlay & Ian Harper, 1983. "The Impact of Inflation and Taxation on Tenure Choice and the Redistributive Effects of Home‐Mortgage Interest Rate ReguIation," The Economic Record, The Economic Society of Australia, vol. 59(2), pages 105-110, June.

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