The Federal Budget 2017 – What’s In It For Housing And Infrastructure?

Federal Budget Housing

The anticipation for this year’s Federal Budget was high, with a lot of people curious to know how the government would handle critical social issues of housing affordability, tax, education and health. As with any changes, there are advantages and disadvantages. Here we will look into the changes relating to the key areas of housing and infrastructure and explain how they may affect you.

The new financial year will see an opportunity for those saving for a home to use their superannuation fund for further salary sacrifice, up to $15,000 per year. From a taxation perspective, super funds are looked upon more favourably than your standard savings account and the Government estimates this can provide a 30% advantage compared with savings in a typical deposit savings account. In saying this, in some Australian states, the first home owner’s grant has been reduced from the 1st of July.  Stamp Duty allowances are still available for some investors and first home buyers in some states.

When it comes to an investment property, there have been changes made when claiming depreciation on certain fixtures & inclusions, characterised as items that may be easily removed from the property. Previously investors were able to claim depreciation of these items that were already existing in the home at the time of purchase. Now, however, investors are only able to claim such items they have purchased directly for their investment property.

There have been a few changes that affect foreign investors. New rules state purchases by foreign investors in new developments must be capped at 50% and capital gains tax exemptions for their main residences has been abolished. In addition, a property owned by a foreign investor that is left vacant for more than 6 months of the year will now be subject to a so-called ‘ghost tax’ of around $5000 per year.

Infrastructure is in the spotlight too, with funding allocated for various projects across the country, to support a growing population in some areas or entice more people into others. A second airport in Sydney’s west was given some financial assistance, creating employment opportunities and potentially making the west of Sydney more attractive for property investors. WA will also benefit from infrastructure funding as the Federal Government tries to navigate its way through the instability in the state after the mining decline, promising a financial contribution for the Perth Freight Link should the project go ahead. A rural rail service between Brisbane and Melbourne also gets a boost, with an $8.4 billion investment aiming to better connect inland areas and larger cities.

Overall, the 2017 budget includes more tweaks than drastic changes, when it comes to housing and infrastructure, in a bid to stabilise the housing market and provide tighter rules around tax breaks for investors. Savvy developers will be looking to European markets to model their development structures to create the most favourable opportunities for all concerned.  Economists and property market commentators will be watching closely to monitor the impact of the announcements.

Federal Budget

DISCLAIMER – Alleura recommends each individual seek the services of a qualified service provider before undertaking any financial investment. The information provided here is for general information purposes only. It is not intended as financial or investment advice.

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