Foreign Investors:
The Federal Government has proposed numerous changes for foreign property investors in Australia. These changes include:
- Capital Gains Tax (CGT) withholding rate that currently applies to foreign tax residents will be increased from 10% to 12.5%.
- The CGT withholding threshold will also be dropped from $2 million to $750,000.
- Foreign investors who have a vacant property that sits empty for over six months per year will be charged an annual fee, equal to their foreign investment application fee.
- Developers will now only be able to sell up to 50% of a development to foreign purchasers.
First Home Buyers:
First Home Buyers will now be able to sacrifice $15,000 per person each year up to a maximum of $30,000 into their superannuation under The First Home Super Savers Scheme. These contributions, which will be taxed at a reduced rate of 15%, and earnings made on them, can be withdrawn at any time to invest in property.
GST Remittance:
From 1 July 2018, purchasers, rather than developers, of newly constructed residential properties or subdivisions, will be required to remit the GST directly to the ATO as part of settlement. This measure is being introduced due to concerns that some vendors are not remitting GST even though GST credits were claimed on their construction costs.
Superannuation for Retirees:
Retirees who plan to downsize from their large family homes, which have been owned for 10 years or more, will be able to put up to $300,000 from the sale proceeds into their superannuation.
New Rules for Investors:
From 1 July 2017, property investors will no longer be able to claim tax deductions relating to expenses incurred while travelling to their investment properties. Investors will also face tighter depreciation deductions under the new budget, with the government planning to disallow subsequent owners of property from claiming deductions on items purchased by the previous owner.