A few elements of legislation announced from over the last few months to the last few years, and the various federal, state and territory-based budgets this year, can impact property investors come the new financial year. Here’s what investors need to look out for when time comes to think about their next tax return.
GST for property settlements
If investors are looking to purchase new residential property after 1 July, the GST needs to be paid to the ATO by the buyer.
“Under this change, buyers of new residential properties or subdivision of potential residential land will be responsible for remitting the GST amount to the ATO on or before settlement,” Mr Morrison said.
“Previously, this was done by the developer. The overwhelming majority did the right thing and passed the GST they collected through to the ATO, but this measure has been introduced to deal with the minority who didn’t through so-called ‘phoenixing’.”
As a result, those who purchase new property will need to take extra steps during settlement, which as a result could impact up to 70,000 sales a year, according to the Property Council of Australia.
The new process will mean additional steps in the settlement process for residential property buyers, including submitting forms to the ATO and separating the GST from the purchase price of the property.
“People buying property after 1 July should talk to their solicitor or settlement agent to ensure they have the right arrangements in place to meet this new requirement and ensure a smooth settlement process,” Mr Morrison said.
Over 65s, selling property and super
For those looking to downsize, measures introduced to parliament in September 2017 and passed both houses in December 2017, from 1 July, $300,000 from the sale of a family home once can be contributed towards superannuation for an individual, and up to $600,000 for a couple.
State and Territory changes
In the 2018–19 Queensland budget, additional funding to the tune of $139.7 million will be funnelled into the Queensland First Home Owners’ Grant.
Additionally, investors need to watch out for:
- The Additional foreign acquirer duty for residential property increasing from 3 per cent to 7 per cent; and
- The land tax rate rising by 0.5 of a percentage point for holdings over $10 million.
In the 2018–19 NSW budget, covering the state, regional areas and Western Sydney, first home buyers who then can transition into becoming a first time investor and rentvest, saw additional relief and grants being made available to them, which will see savings of up to $34,361.
Announced back in late July 2017, local infrastructure levy caps will rise in areas not funded by the Local Infrastructure Growth Scheme, up to $40,000 for greenfield areas and $30,000 for infill areas.
Announced first in the South Australian budget for financial year 2015–16, the final phase of the removal of stamp duty will be enacted on 1 July 2018. This will then also impact the off-the-plan stamp duty concession, which will end on 30 June 2018.
In the 2018–19 Tasmania budget, first home buyers will see a $20,000 First Home Owner Grant, with the eligibility being extended from 1 July 2018 to 30 June 2019, as well as what Propertyology’s Simon Pressley called a 50 per cent “stamp duty holiday”, with savings of up to $7,000. Additionally, he also said a similar incentive would be made available for downsizing seniors.
Foreign investors in Tasmania would also be hit with the foreign investor duty surcharge, which would see an extra 3 per cent of the dutiable value for all purchases by foreign residents and an additional half per cent of the dutiable value for all purchases of primary production land by foreign investors.
Announced in the ACT budget for financial year 2018–19, first home buyers saw measures to both help and hinder with the abolishment of stamp duty for those who earn less than $160,000 for both new and existing homes, but the first home buyer’s grant for the territory was also abolished.