There’s been so much noise in recent times about housing changes needed; including negative gearing, affordability, property bubbles and foreign investment to name a few. There were several changes in the budget to address some of these hot topics.
The new measures have impacted on a variety of housing rules from first-home buyers’ savings strategies to what investors can claim at tax-time.
Here are the key 6 housing changes:
1. The introduction of the First Home Buyers Super Saver Scheme
Assisting first home buyers to build a deposit inside superannuation.This will allow entry-level buyers to save funds at a discounted tax rate by making additional contributions to their superannuation.
These additional contributions, and earnings made on them, would then be able to be withdrawn to be used as a home deposit. From 1st July 2017 voluntary contributions of up to $15,000 per year and $30,000 in total will attract a concessional tax rate of 15%. Contributions and earnings can be withdrawn from 1st July 2018. Read more
2. Foreigners can only buy up to 50 per cent of a development
Under the new budget rules, developers will no longer be able to sell every property in their new development to overseas buyers.
Instead, a maximum of half the development can be sold to foreign buyers with the rest to be sold locally. The budget documents note this is to provide a “clear message” that new housing stock is expected to increase supply for Australian buyers.
Before this change developers required pre-approval to sell properties to foreign buyers but there was no limit on the proportion of sales.
3. An ’empty home’ tax on foreign investors
Foreign investors who keep properties vacant for more than six months will be faced with a vacancy tax. This is described as a charge on “underutilised residential property”.
The cost of this tax will be the equivalent of their foreign investment application fee – an annual charge of at least $5,000. This change is intended to get more vacant homes onto the rental market. This charge will apply from Budget night, 9 May 2017.
4. Disallowing investors from claiming travel deductions
Investors who previously had tax deductions for travel expenses related to their investment property will no longer be able to make these claims.
The government has ruled them out, even for those travelling to collect rent, maintain or inspect a premises, saying many have been incorrectly obtaining this deduction. This has included situations for “private travel purposes”. From budget night the government will also limit plant and equipment depreciation deductions to only those expenses incurred by investors.
5. Retirees given incentives to downsize
Australians aged over 65 who sell their home of a decade or more will soon be able to put up to $300,000 in sale proceeds into their superannuation. If you are a member of a couple you will be able to take advantage of this measure for the same home. This means $600,000 per couple can be contributed to superannuation through the downsizing cap.
This incentive to downsize is expected to help free up larger homes for families to move into.
6. Increasing CGT discount for investors in affordable housing
From 1 January 2018, the Government will provide an additional 10% CGT (capital gains tax) discount to resident individuals investing in qualifying affordable housing. This means investors in qualifying affordable housing will be entitled to a 60% discount on capital gains tax.
To qualify for the additional discount, housing must be provided at below market rent and made available for eligible tenants on low to moderate incomes.
What do you think of these housing changes? How do you think these changes will improve things for you?
If you have any questions, or would like to know how any of these changes will impact you please contact us