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2017 Federal Budget: Highlights for our industry

By Alanna Ngo

Federal Treasurer Scott Morrison’s second budget was delivered last night to Australia, with a range of changes for first home buyers, property investors and older Australians looking to downsize. Overall, the measures are designed to free up more development land and get first home buyers into the market sooner.

A lending hand for first home buyers
From 1 July, first home buyers able to salary sacrifice extra contributions into their superannuation account up to a maximum of $30,000 in total and $15,000 in a single year.

From 1 July 2018 onwards, the ‘First Home Super Savers Scheme’ will allow first home buyers to withdraw that cash, along with any associated earnings. Under this plan, it’s proposed first home savers fast-track their savings by at least 30 per cent.

Tighter rules for foreign property investors
Overall, foreign investors are negatively impacted in the Budget package through a number of tighter restrictions, which came into effect last night. These include:

  • Tightening capital gains tax, no longer being able to access main residence exemption
  • Increasing the capital gains tax withholding rate from 10 per cent to 12.5 per cent
  • Reduce the capital gains tax withholding threshold for foreign tax residents from $2 million to $750,000
  • Tax of $5000 per annum to be imposed on foreign investors with vacant properties

Downsizing incentives
Freeing up more properties through encouraging empty nesters to downsize is at the heart of the Federal Government’s plan.

From July 1, 2018, people aged 65 and over will be able to make a non-concessional contribution of up to $300,000 from the sale of their principal residence into their superannuation, provided they have lived there for at least 10 years.

Take a look at Ray White Downsizing | here

Negative gearing
In 2016, Ray White drove a successful education campaign, highlighting the value negative gearing provides to our industry. Last night’s Budget announced that negative gearing will remain and while property management fees for agents will remain tax deductible, from 1 July:

  • depreciation deductions for plant and equipment items such as washing machines and ceiling fans will only be allowed if the investor bought them.
  • investors will no longer be able to claim tax deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property.

Extra housing to stimulate growth
Addressing the housing shortage, the Federal Government will work with states and territories to reform planning and zoning laws, opening up more Commonwealth land for development, and establishing a $1 billion National Housing Infrastructure Facility.

At a glance

  • $21b in new taxes
  • 2.75% economic growth
  • $75b infrastructure spending over 10 years
  • Sourced: www.raywhite.com
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