Property Investors and new 2017-18 Federal Budget – How will the Federal Budget 2017-18 affect the property investors?

Property Investors and new 2017-18 Federal Budget – How will the Federal Budget 2017-18 affect the property investors?

By Milan Tojcic

More and more Australians love property investment for many reasons, including long history of sound returns, building wealth, population growth, very well-reported housing undersupply and ongoing infrastructure development indicating some highly desirable ticks. This however has been known for a while and Australians are quite the fans of property investment over generations now.

Now given the competitive market, and current historic low rates and a free consultation from an Expert Mortgage Broker, there has never been a more momentous time to consider revising your investment strategy, recalculating and reviewing your property investment loan to get maximum returns.

This is where I’d like to put a picture of something, like houses or something. Property investors or just a basic picture of units in an unknown street. Or just a business attire person purchasing property.

The most recent Federal Budget 2017-18 has implemented some changes that may sting the property investors. Changes include scraped tax claims made for visiting investment properties they owned; some tightening on depreciation deductions for investment properties; and property developments will be capped at 50% for foreign ownership.

Also, purchasers of newly constructed residential properties (or new subdivisions) will be required to remit the GST directly to ATO as part of settlement; and from 50% to 60% CGT discount will be passed onto investments in ‘affordable housing’ thus encouraging more ‘affordable housing’ investments.

As parallel measure to aid first home buyer are displayed in the new budget 2017-18, property investors have been hit with a few cutbacks. So are they going to affect the long run residential investors, highly unlikely.

Property investors will be scraped off for costs incurred for travelling to their investment properties and back. So as off 1 July this year the right to tax deductions by property investors to their property investments and back will be completely removed.

Next will be tightening on the depreciation deductions on investment properties with a plan to no longer allow second property owners to claim deductions on items purchased by already previous property owners.

The other government act by the budget is that it will impose a limit to the percentage of foreign ownership in new property developments. By limiting the percentage ownership of foreign property investors in new property developments to 50%, the government is hoping to increase the supply in the domestic market.

So far, the GST on newly developed property was something that the builders were supposed to pay for once the property is built. However; because the government was having trouble chasing the builders to make due payment on their GST, they decided to transfer the cost onto the purchaser. So, going forward, after 1st July 2017, all newly developed residential properties will be passed onto the purchaser on the settlement date.

The new 60% discount for investments in ‘affordable housing’; this scheme is a totally new concept that’s meaning hasn’t been entirely clarified and the government is yet to produce a full definition of it; but it sounds good if there is a chance for property investors to be motivated by it and start purchasing and leasing more ‘affordable housing’ investments. “Below market rental cost” is the current definition of ‘affordable housing ‘and property investors might be enticed to look for some properties with good capital gains to make it worth their while.

Will this affect the markets and property investors in a positive way regarding residential property investors?

Perhaps in the short run but in the long run the markets in Australia have provided solid returns in the past and highly unlikely will it affect the local property investors by a great deal.

Want to find out some more information about the property investment options and talk about the current market climate trends. Contact a professional financial adviser, or speak with an Expert Mortgage Broker.

Therefore, biggest decisions in life should be done right, choose nothing but the experts on your side.

First Home Buyers and new 2017-18 Federal Budget – How will the Federal Budget 2017-18 affect the first home buyers?

First Home Buyers and new 2017-18 Federal Budget – How will the Federal Budget 2017-18 affect the first home buyers?

By Milan Tojcic

“Smallest step in the right direction will end up being the biggest. Well, we’ll tip toe with you in the process until you start walking.” (Expert Mortgage Brokers)

This is where I’d like to put a picture of something, like houses or something. First home buyers or just a basic picture of houses in an unknown street. Or just a couple purchasing a house.

The federal budget 2017-18, again like budget 2016-17, shows no immediate fixes for the process of quick-fix housing affordability. However, with short term changes to budget, the First Home Super Saver Scheme, the long-term results may be different.

The issue with the first home buyers getting into the market “these days” has become evident with such high housing prices. Increasing degree of difficulty to save for a deposit resulting with Aussies entering the housing market much later than their parents and grandparents.

Generally, as the federal budgets change over time, in attempt to ease the entry into the market for first home buyers, most recent budget hasn’t made an immediate fix for the group. However, Since the last year’s financial budget that hasn’t changed much in favour of the first home buyers, budget 2017-18 has made a slightly bigger improvement.

So, what are the alternatives for the first home buyers by the new budget?

From 1 July 2017, Australian first home buyers may be able to salary sacrifice up to $15,000 per year and a lifetime limit total of $30,000 into their super. Once they are ready to use their savings as a deposit to purchase a property, at least a year later, that is in 1 July 2018, they can withdraw the funds from their super and use them to purchase their first home.

For couples who are trying save their first home purchase, this is ideal because they may both be able to take advantage of this scheme and contribute up to $60,000 into their super. Although the couple may not have an immediate fix to the matter, they may have a good chunk they can use to contribute their purchase of the first property with a higher deposit.

As good as it sounds, the scheme will not escape the “super tax department”. Salary sacrificed savings will be something that will be taxed by the “super tax department”, so to speak. However, the saving will be greater than in a deposit account as the amount salary sacrificed will be exposed to “concessional tax rates”. Hence a better way to save for a first home purchase than keeping the deposit in a savings account.

What does this mean for businesses wanting to purchase their first home?

Businesses are also able to benefit by allowing them to claim a tax deduction on personal contributions they can make and that way benefit as well. Alternatively using their pre-tax income as a benefit to contribute to a higher deposit for their first home purchase.

Want to find out some more information about the first home buyer super options and talk about the current market climate trends. Contact a professional financial adviser, or speak with an Expert Mortgage Broker.

Therefore, biggest decisions in life should be done right, choose nothing but the experts on your side.