Its been over a week now since the Federal Budget announcement and no matter how many people I speak to, they still seem confused on how it will and can have an affect on real estate.
So put simply I have identified a few and noted them below:
1. First Home Buyer Saver Scheme Through Superannuation.
First home buyers now have a great opportunity to salary sacrifice a deposit! Each person who qualifies as a first home buyer can now add up to $15,000 per year to there superannuation which will not be taxed - GREAT NEWS. Sometimes it sounds too good to be true however this is still excellent news. The catch is this - you can only do a maximum of $30,000, a cap at $15,000 per year and if your a couple that could be $60,000 over two years if you both salary sacrifice $15,000 per year. Above all these monies will not be taxed and most importantly the interest they make within your super fund can also be withdrawn as a deposit.
Conclusion: Huge tick of approval with this incentive really paving the way for first home buyers to save and get into the real estate market.
2. Incentives For Retirees To Consider Downsizing
Retirees ave been given a boost and nudge in the right direction allowing them to downsize affordably without losing many benefits, Basically any Australians aged over 65 years old will now be able to sell there family home of more than 10 years and whack a fair chunk (up to $300,000 in fact) into there super fund allowing them to re-use that money to downsize. What this allows is now for retirees to consider selling and downsizing instead of holding onto there properties because of pension or tax implications.
Conclusion: Another big tick for the government here as this doesn't only help retirees, it also in turn helps make family homes available for our ever growing population.
3. Foreign Buyers Restricted To Purchase Only Up to 50% of any New Development
Overseas buyers will now only be able to purchase up to a maximum 50% of any new development. This again is to push for local purchasers the opportunity to buy into any new development. Many people see this a s a positive in today's market place with many overseas investors buying new or off the plan developments throughout the country.
Conclusion: Personally I think this is a terrible move . What this does is make it extremely hard for developers to purchase, build and in turn base those returns on expected sales. The banks are already making it very hard for developers to borrow money and with an avenue of sales being shut with this new implementation, borrowing more money will be even harder. Bad move as in the long run this may prove to be a slow growth in developments.
4. Tax To Be Incorporated On Empty Properties Left By Foreign Purchasers
In the real estate industry there is a known phrase called ghost properties, These are properties that are purchased by overseas purchasers and are left vacant. The aim of these overseas buyers are to have the property purchased and they can live and reside in them when they visit or when suits best in the future. The aim by the overseas investor is to purchase whilst there means allows them and the price of property exceeds there budget.
The tax incorporated on buyers who do not rent there properties out will be the application fee they put forward to the Foreign Investment Review Board. This could equate to several thousands of dollars.
Conclusion: This is an interesting one. I believe this to be a great initiative from the government to have more properties rented, however it remains to be seen if it will be effective. My concern is that the overseas buyers pride may allow them still to choose to pay the application fee to FIRB then to have someone else live in the premises before they do. Time will tell...
After a few years I suppose we will see what these budget implementations do and more importantly how it will change the real estate market in Australia. Overall something needed to be shown by the government to help our ever growing population and the first home buyers that are simply getting out priced in today's market. Lets revisit this in a few years and see if has gone according to plan.