Main home exclusion One key design issue is whether the bright-line test should apply to a person’s main Options Advantages Disadvantages Recommendations Removes difficult boundary Is not as well targeted Not recommended questions in defining towards main issue of high residential land churn of residential property. Apply The lock-in effect is greater to all as it affects businesses land decisions whether to replace commercial property with more productive premises. Focuses towards main issue Creates difficult Recommended of high churn of residential questions for property defining residential land Targeted towards main Apply objective and minimises to just No lock-in effect for effect residential land commercial property lock-in effect is most distortionary home. Inherited and relationship property The current land sale rules provide special treatment for inherited property and Options Advantages Disadvantages Recommendations Greater revenue gains. Less Taxing gains on the main Not recommended exceptions from bright-line home is likely to have little Don’t exempt creates a clearer more public acceptability. main home objective test. Greater public acceptability. Less revenue gains, and Recommended bright-line becomes more Property is less likely to have subjective Consistent with existing Exempt main been bought with an intention rules home of resale if it is the seller’s main home. relationship property. The analysis below considers whether special treatment should apply under the bright-line test for these transactions.
Options Advantages Disadvantages Recommendations Apply to all land Removes difficult boundary questions in defining residential land Is not as well targeted towards main issue of high churn of residential property. The lock-in effect is greater as it affects businesses decisions whether to replace commercial property with more productive premises. Not recommended Apply to just residential land Focuses towards main issue of high churn of residential property No lock-in effect for commercial property lock-in effect is most distortionary Creates difficult questions for defining residential land Recommended Targeted towards main objective and minimises effect Main home exclusion One key design issue is whether the bright-line test should apply to a person’s main home. Options Advantages Disadvantages Recommendations Don’t exempt main home Greater revenue gains. Less exceptions from bright-line creates a clearer more objective test. Taxing gains on the main home is likely to have little public acceptability. Not recommended Exempt main home Greater public acceptability. Property is less likely to have been bought with an intention of resale if it is the seller’s main home. Less revenue gains, and bright-line becomes more subjective Recommended Consistent with existing rules Inherited and relationship property The current land sale rules provide special treatment for inherited property and relationship property. The analysis below considers whether special treatment should apply under the bright-line test for these transactions.
2015-ris-bltrl-bill.docx