The 2017 Federal Budget was highly anticipated by many in the housing industry – especially in regard to negative gearing and housing affordability. While the announcement may have fallen short of many expectations, it has taken realistic and practical measures to increase available housing stock for Australians.
Here are the key takeaways for home owners and investors.
- A boost for first home buyers. To help first home buyers save for a home they’ll be able to contribute $15,000 a year into their super for a house deposit. The lifetime total you can contribute is $30,000. The scheme starts on 1 July 2017 and withdrawals will start 1 July 2018.
- No more travel deductions. Own an investment property you travel to visit? Claiming travel to manage your residential investment properties is no longer. You can still claim estate agent and property manager fees however.
- An incentive to downsize. If you are aged 65 and older you can contribute up to $300,000 from the sale of your primary residence into your superannuation from 1 July 2018. You have to have owned the home for 10 years. This is to encourage older people to downsize and free up housing for younger families. The $300,000 is in addition to any other contributions you can make to your super. It’s per person, so a couple can contribute $600,000.
- Higher tax for foreign investors. Foreign buyers will no longer be exempt from capital gains tax when selling their main residence in Australia. And this rate will increase from 10% to 12.5% from 1 July 2017. The threshold for withholding tax will be lowered to $750,000, from $2 million.
It’s important to remember that the announcements in the Budget still need to pass through Parliament to become legislation. If you think you will be affected by the Budget announcements and would like to talk through your options for selling or buying a house in Melbourne and surrounds, please give our team a call on 03 9511 8883.