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.