This month, the government has announced a series of new measures designed to improve housing affordability. We have provided a glimpse into the changes that may affect our clients.
FIRST HOME SUPER SAVERS SCHEME
From July 1, savers will be able to salary sacrifice extra contributions into their superannuation account above the compulsory contribution, up to a maximum of $30,000 in total and $15,000 in a single year.
They will then be able to withdraw that cash from July 1, 2018 onwards, to place a deposit on a house or apartment in an effort to help young people gain a foothold in the property market.
“Under this plan, most first home savers will be able to accelerate their savings by at least 30 per cent,” Treasurer Scott Morrison said in his budget speech.
It will attract the tax benefits of superannuation, with contributions and earnings taxed at 15 per cent, rather than marginal rates, and withdrawals taxed at 30 per cent below their marginal rate.
NEGATIVE GEARING RULES TIGHTENED FOR INVESTORS
Negative gearing remains, but rules are being tightened around what can be claimed, specifically travel expenses and depreciation deductions.
Under new rules coming into effect from July 1, depreciation deductions for plant and equipment items such as washing machines and ceiling fans will only be allowed if the investor actually 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” from July 1.
Property management fees for third parties such as real estate agents will remain tax deductible.
FOREIGN PROPERTY INVESTOR CRACKDOWN
Foreign investors are facing a tax crackdown under the Budget package, while new developments will be subject to a 50 per cent cap on foreign investment approvals to “safeguard the opportunity for Australian buyers to purchase”.
Capital gains tax rules are being tightened for foreign investors, who will no longer be able to access the main residence exemption. Foreign investors in residential real estate will be slapped with a “ghost tax” if they leave their properties empty or not available for rent for at least six months of the year.
DOWNSIZING INCENTIVES FOR BOOMERS
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.
This move is aimed to encourage empty nesters to downsize to free up more properties.
If you have found your situation has changed, remember we offer a free review of your current mortgage product to determine whether there is a better option to suit your needs.
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