The Federal Budget 2018 – 2019 released and effects on property buyers and property investors
Published on June 30th, 2018
Milan Tojcic I Property investor and enthusiast
Director of Expert Mortgage Brokers I Head Finance Broker
Given the already proposed Budget that will be implemented since 1st July 2018 is not the most relevant and will not make much impact on investors but more so to first home buyers. It might be worth going through the changes anyway. Besides some small tax cuts to low to middle income earners, there are major changes to affordable housing. Whilst improving affordable housing Budget 18 – 19 will cut vacant land holders claiming interest costs where land is not genuinely held for earning assessable income. This year’s budget involves instant tax write off for small businesses for purchases under $20,000 extension.
Budget will largely focus on Aged care and mostly infrastructure improvement. Melbourne improvements to be funded for a rail line to Melbourne Airport. Some 14,000 Aussies will get their homecare packages with $1.6 billion to be used over 4 following years. In attempt to ease the congestion in Melbourne and other states, primarily focusing reliving commuters to Melbourne airport. There is $24.5 billion to be provided to infrastructure around Australia and about $5 billion towards rail line in Melbourne Airport. Hence the infrastructure is believed to improve property value in the somewhat near future potentially causing some property price hikes.
Most importantly this foundation of tax cuts is primarily funded by a crack down onto illicit tobacco, money laundering and certain sectors known to avoid paying tax like foreign companies using loopholes avoiding the tax office. So, the main foundation to this year’s tax cut will not be out of the Australians pockets but from ‘other avenues’.
The new budget will provide tax relief targeting low to middle income earners. So, the main winners in this budget will benefit from just over $10 per week or $530 per year that can only be claimed after June 2019. But in which tax bracket exactly? If you are earning up to $37,000 per year there could be up to $200 back in your pocket. Anyone on and up to $90,000 income bracket will get a maximum of $530 per year. The other tax savings changes will be the bracket not up to $87,000 but up to $90,000 and that rate is now 32.5% and not what used to be 37%. The 37% tax rate will be applied from the $90,000 income bracket. Some great tax benefits that can be used to incorporate to save for the first home buyers along with affordable housing in the following.
Housing with measures to improve affordable housing are on track with $1 billion to be provided for National Housing Finance and Investment Corporation and release of more land for affordable housing development. In attempt to address affordable housing concerns the new budget will focus on claw-backs via people claiming interest costs relating holding vacant land where land is not genuinely held for earning assessable income.
Hence, the overall budget will not be the most significant to property buyers, property investors and especially the first home buyers. However, in some instance the expansion and focus on affordable housing can improve the household savings. That is to provide a chance for first home buyers to save for their first house by paying cheaper rent.
Once you’re ready to further inquire about a loan and if you like to further discuss the new Federal Budget, a mortgage broker can help you make a more informed decision about which loan to choose. With a lot more, loan products than ever before on offer from a variety of lenders – you can receive loan information that will provide you with a much more informative position and make your decision easier when the time comes. So, contact your local Expert Mortgage Broker and enquire within.