Budget 2017: How will it impact property?
It’s clear that there are winners and losers in this year’s NSW budget. Property investors are often seen as a target for our state government in which to increase revenue coffers, and this year’s release is no surprise. Whilst investors have lost some tax deductible benefits, including travel when inspecting investment properties, foreign investors have been hardest hit, with increased surcharges and fees on top of the already prohibitive costs to buying property in our fair state. So who won and who lost?
FIRST HOME BUYERS
There has been a multi-pronged approach to making first home buyers lives a little easier, with the following changes:
- Abolishing stamp duty for first-home buyers on existing and new homes up to $650,000 and introducing stamp duty discounts for properties worth up to $800,000;
- Scrapping stamp duty charged on lenders mortgage insurance when it is required for first-home buyers with limited deposits;
- Local investors purchasing off-the-plan properties will no longer be able to access stamp duty concessions. This will aim to lessen competition and hopefully assist genuine first home buyers to get into the market somewhat easier.
First home buyers will also be able to use their voluntary superannuation contributions to build tax protected savings for a home deposit. The move is seen as a risky measure from the Turnbull government creating a new exemption to taking money out of super which until now had been restricted to cases of severe financial hardship. Under the plan first home borrowers can accumulate voluntary contributions savings in their super and then withdraw some of those savings to buy a home. The most that can be contributed in one year is $15,000 and the cumulative maximum that can be put in is $30,000.
PUBLIC HOUSING AND THE HOMELESS
Family and Community Services funding has increased by almost $500 million to $7 billion, with $1.1 billion of that to go towards homelessness and social housing services.
$218 million will be put toward maintenance and upgrades of public housing, while another $152 million will pay to improve Aboriginal housing outcomes.
$20 million will go to putting rough sleepers into transitional housing for up to four years and another $19 million will go towards parenting, education, work and health programs aiming to break disadvantage for tenants in the social housing system.
Announced as a boon to first-home buyers, the Government will increase the foreign investor surcharge from 4 to 8 per cent on housing stamp duty. This may well impact decisions made by foreign investors on purchase price, as this is a significant 100% increase on the existing levy.
Overseas buyers will also pay a 2 per cent surcharge on land tax. Again, a sneaky tax that will be hard to swallow, and particularly by those buyers who fail to notify OSR of their housing status.
Most controversially, the government is to impose a 50% cap on foreign ownership in new property developments. This measure has been explained as a way to ‘increase the housing stock for Australian purchasers’. However, it is bound to be very unwelcome to developers who specialise in overseas marketing to foreign investors.