With the federal budget for the 2017-18 financial year coming out on Tuesday night, there has been plenty of talk, both in the media and online, about what the Treasurer, Scott Morrison has delivered. But what does it all actually mean for you? Does it affect you as a property investor? Will it make things easier for property investors or first home buyers? How will this impact property prices?
We explain it all here for you, in plain English, so you can clearly see if and how the new budget will affect you as a property investor.
For those of you who already own an investment property, there are some changes happening that may affect you depending on your investment strategy. Firstly, there is now going to be some restrictions to what plant and equipment assets you can claim depreciation on. This will be limited to the investors who actually incurred the outlay – not subsequent owners. For example, if you purchase a new dishwasher for your investment property, you are able to claim the depreciation. However, when you sell the property, the new owner will not be able to claim any depreciation on that same dishwasher. As such, this will not affect those of you who have a strategy to buy and hold new investment properties.
Secondly, investors can no longer claim travel expenses related to inspecting, maintaining or collecting rent for your residential investment property. We don’t see this as a huge negative but it does make it even more important to conduct proper research when selecting your property manager to ensure your property is being well looked after.
For those of you saving for your first home, you will now be able to save part of your deposit inside your super. From 1 July 2017, individuals can make extra voluntary super contributions of up to $15,000 per year. These contributions will only be taxed at 15% and from 1 July 2018, can be withdrawn to go towards the deposit on a first home. When withdrawn from super, these contributions will be taxed at the marginal rate less a 30% offset. All in all, you won’t be paying quite as much tax on your savings, and the government expects the scheme to boost the savings you can put towards a first home by at least 30%.
Foreign investors will be impacted quite a lot with developers now being restricted to selling no more than 50% of their developments to international buyers. The government will also charge foreign owners $5,000 annually if their residential property is not occupied or available for rent for at least 6 months every year.
A big plus for us as property investors is the government’s commitment to spending $75billion over the next 10 years on infrastructure. This will mainly be focused on roads, rail projects around Australia, and Sydney’s second airport in Badgerys Creek. The good news is that this is all required infrastructure that will help to drive jobs and growth in certain areas throughout Australia and will create some great opportunities for investors in these areas.
Lastly, we can’t forget the hot topic in the media over the last couple of months, negative gearing. As many predicted there was some great news for you as a property investor, with negative gearing remaining untouched for all investment properties.
Should you require any more information, please get in touch with our specialist property strategists, we are happy to help!