First home boost via super
Voluntary superannuation contributions of $15,000 per annum (to a maximum of $30,000) can be withdrawn and used for a deposit for first-home buyers from July 1, 2018. It will be taxed at 30 percentage points below the normal marginal rate. Both members of a couple can take advantage of the first home super saver scheme. Villawood Properties executive director Rory Costelloe said this salary sacrifice option supports first-time buyers “without taking anything away from the wider market”. “Victoria currently has 21 days’ worth of supply of land on the market. In a competitive market, it’s more like 90 days. The real answer to affordability is to increase supply – this means reduce planning red tape and third-party appeal rights to allow developers to get sufficient supply to the market.”
Rental deduction charges
From July 1, travel expense deductions related to the owner inspecting, maintaining or collecting rent for a residential rental property will no longer be allowed. Investors can engage third parties, such as real estate agents, to do these tasks and deduct those expenses. Depreciation for equipment that can be removed (such as ceiling fans, carpets or a dishwasher) will be limited to those outlays incurred by investors. A deduction can be claimed for equipment bought after May 9 over the effective life of the asset. But subsequent owners will not be able to claim it. “Investors factor in wear-and-tear costs at the time of purchase to cover the replacement of these plant and equipment items. Given each item claimed is annualised based on age, we don’t understand the government’s concerns around possible additional deductions and double-dipping if the property is later sold,” said Property Investment Professionals of Australia chair, Benjamin Kingsley.
Older people aged 65 and over and wishing to downsize their place of residence (of at least 10 years) can contribute $300,000 from the sale proceeds to their superannuation (for its tax benefits). From July 1, 2018, both members of a couple will be exempt from the existing age, work and $1.6 million balance tests for making non-concessional contributions. “The policy regarding retirees being able to make lump-sum contributions to super is sensible and will make it easier for retirees to downsize. This will go a long way towards enabling and empowering retirees to upsize lifestyle while downsizing the family home,” said Stockland managing director Mark Steinert.
National housing infrastructure facility
A $1 billion fund has been established to fund deals with local governments “to remove infrastructure blockages” to unlock new housing in greenfield and infill sites. “The government has adopted UDIA’s recommendation in making under-utilised and surplus Commonwealth land available for housing development.” This includes a 127ha site of surplus Defence land in Maribyrnong for up to 6000 new homes,” said UDIA Victoria chief executive Danni Addison.
Foreign investment restrictions
A 50 per cent cap will be put in place on pre-sales to foreign buyers in new developments. Also, a so-called vacancy tax – an annual charge of $5000 – will apply to foreign owners who leave their properties unoccupied or unavailable for rent for six months or more each year. “The additional levy (vacancy tax) isn’t likely to act as a major disincentive to foreign investment; however, the policy could be difficult to monitor and enforce,” said CoreLogic RPData research director Tim Lawless.