Should Australia have a mansion tax?

By
Orana Durney-Benson
December 12, 2024

In April 2023, Los Angeles imposed a new tax on the city’s wealthiest residents. 

Colloquially dubbed the “mansion tax”, it levies a 4 per cent charge on all property sales above $US5 million ($AU7.8 million). 

For sales above $US10 million ($AU15.6 million), the tax rate is upped to 5.5 per cent. 

All revenue generated from the tax is used to directly fund affordable housing and homelessness programs run by the city’s housing department. 

Unsurprisingly, not all Los Angeles residents were enthusiastic about the new tax. 

Some sellers deliberately listed their properties at $4,999,000 to avoid paying the additional tax. 

Other wealthy homeowners avoided buying and selling property altogether, leading to a marked slowdown in the high-end market. Rich enclaves like Beverly Hills and Malibu saw double-digit declines in luxury property sales. 

Despite this, the Los Angeles mansion tax managed to raise more than $US439 million for housing programs in the first 18 months. 

Los Angeles isn’t the only global city to impose a mansion tax. 

In Westminster, London, homeowners pay a tariff on properties valued more than £10 million ($AU20 million) to fund youth homelessness services. 

Currently, no similar tax exists in New South Wales. Properties with a land value more than $6,571,000 are charged a premium land tax rate, but it’s just 0.4 per cent higher than the general rate for non-owner-occupied properties. 

In 2022, the NSW Greens proposed an “Extreme Wealth Property Tax” on luxury mansions. 

The suggested tax would impose a 4 per cent charge on owner-occupied mansions with a land value of more than $10 million, or an improved value above $20 million. All revenue would go towards building more social and affordable housing. 

The Greens also proposed broadening the land tax threshold to include investors with eight or more properties.

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