1.1 Property investors
From 1 July 2017, the Federal Government will limit plant and equipment depreciation deductions – that is on items that can be easily removed- to purchases that will have directly, actually incurred by investors in residential properties.
- Plant and equipment that are part of a residential investment property as of 9 May 2017 7:30PM will continue to benefit from deductions for depreciation until either the investor no longer owns the asset, or the asset reaches the end of its effective
- After 9 May 2017, deductions for Plant and Equipment bought and installed in a residential investment property will also be allowable over the effective life of the items. They will be reflected in the cost base for CGT purposes for subsequent investors.
- However, subsequent owners of the residential property will not be able to claim deductions for the plant and equipment purchased by the previous owner.
1.2 Deduction for travel expenses related to rental properties
From 1 July 2017, investors will no longer be able to deduct traveling expenses incurred in managing, inspecting or maintaining their investment properties.
1.3 Vacancy tax
From budget night, 9 May 2017, a new vacancy tax will be placed on foreign investors who leave properties vacant for at least six months of the year. The levy will be of at least $5000.
1.4 Withholding tax
From 1 July 2017, any real estate property sale exceeding $750,000 is subject to a 12.5% withholding tax on the sale price which is to be remitted to the Australian Taxation Office by the purchaser. Australian tax residents selling their properties will be able to obtain a clearance certificate before settlement to avoid the withholding tax
1.5 Property developers
From 1 July 2018, purchases of newly constructed or subdivided residential properties will have to remit the GST on the purchase directly to the ATO at the time of settlement. It is expected that this will be done as a part of the conveyancing transaction.
Foreign ownership of newly constructed dwellings such as apartment buildings will be restricted to 50% of the units sold.
Developers meeting the minimum ownership threshold will be granted a New Dwelling Exemption Certificate.
1.6 First Home Buyers – Superannuation
From 1 July 2017, the Federal Government is allowing individuals to make voluntary superannuation contributions of up to $15,000 per year, and $30,000 in total to contribute to a deposit for a first home.
The contributions can then be withdrawn from 1 July 2018.
1.7 Disposal of principal residence – Superannuation
From 1 July 2018, individuals over the age of 65 will be able to contribute up to $300,000 in non-concessional contributions to their Superfund from income earned on the disposal of their principal residence they owned for at least 10 years.