Undoubtably one of the hardest Federal Government budgets we have seen in quite some time. Lets look at just how this budget affects property investors?
A sigh of relief is in order that no changes have been made to Capital Gains Tax, Depreciation or Negative Gearing. Now, I’m not a fan of negative gearing all that often, the purpose of investing in anything is to achieve good growth and income for the future. However I do like the little incentive us property investors are given when it comes to the all to controversial depreciation. Absolutely I’m biased. I benefit from depreciation so I’m not going to argue it shouldn’t be in place. Ultimately, i think it is a great way for the everyday Australian without a business to take advantage of some form of taxation benefit that the big guys get all the time. Currently $6 billion dollars a year is lost in tax revenue due to negative gearing.
There was one sector in the property industry that didn’t get too lucky, and thats the NRAS scheme. Round 5 of the National Rental Affordability Scheme will be frozen. I think this is a good move as it was lining the pockets of smart developers and even better property marketers while the everyday investor lined up to buy overpriced property to simply get some money from the government. Now I know theres a lot more to it than that however the scheme has been flawed in many ways.
The property industries push for ASIC regulation of the industry is seemingly unlikely in the near future as large budget cuts to the ASIC budget are handed down forcing large scale job cuts within the organisation. It doesn’t look promising that the team at ASIC will want to take on more work with less staff and money.
Home owners or investors are generally a pretty small deal when it comes to Federal budgets. Its often the state budgets that can make big differences including stamp duty concessions & rates plus the ever tinkering of First Home Buyers Grants.
Outside of investing, First home buyers taking advantage of the Labor Governments First Home Savers Account (FHSA) will no longer be able to get tax breaks and co-contributions as the scheme will be closed starting July 1.
I think if anything, this budget should send a reminder to Australians of why investing in assets (not just property) is a necessity to gain financial freedom and retirement when you want it. With the pension age pushed out even further, serious holes in the future funding for pensioners, its clear we need to invest