2017 Budget introduces 'ghost home' tax for foreign purchasers of vacant kept Australian property

2017 Budget introduces 'ghost home' tax for foreign purchasers of vacant kept Australian property
2017 Budget introduces 'ghost home' tax for foreign purchasers of vacant kept Australian property

The Australian government, seeking to address the perceived issue of foreign buyers hoarding properties, will enact a new tax on any vacant properties owned by foreigners.

"This measure is intended to encourage foreign owners of residential property to make their properties available for rent where they are not used as a residence and so increase the number of dwellings available for Australians to live in."

The new charge will come into effect as of Tuesday night's budget and will be levied annually.

It will bring in $16.3 million over the forward estimates being monitorred by the Australian Tax Office.

There are few details on its implementation. The Victorian tax will be self-reporting. 

Julius Wei, Co-Founder and Head of Investment Analysis at BMY Group said while the plan of a ‘ghost property tax’ doesn’t come from a bad place, though the structure of taxing only foreign investors is "however missing the target."

"As the locals definitely hold way more investment properties (considering the negative-gearing advantage they enjoy) than foreign buyers, the tax should apply to all vacant property holders regardless of whether they are local Australians or foreign investors.

"This is again more political than directly tackling a financial and economic problem of saying we don’t welcome foreigners, despite local investors have way more influence on the property market.

"At a time when the Australian domestic demand is in deep trouble (checking today’s disastrous retail sales figures), the country should welcome foreign sources of investment, talent and buyers of its exports, not doing the opposite to shut the doors," Julius Wei said.

The Property Council of Australia chief executive Ken Morrison said the vacant property chrarge was a waste of money.

"We have not seen any evidence that the 'vacant property' issue is real," Mr Morrison said,

"It appears to be a policy seeking to solve an 'urban myth'.

Mr Morrison said that the tax "will cost more to administer than it will raise."

"This measure will not improve housing affordability one iota," he told The Australian Financial Review.

Earlier this month Property Observer reported that foreigners who leave their home vacant could be taxed at a Federal level.

Soon after Juwai's Gavin Norris reported on what the new Victoria vacant property tax means for residents.

Similarly earlier this year Property Observer reported that Victoria was to implement a new vacant property tax to tackle its housing affordability issue.

Tags: 
Foreign Buyers Vacant Tax

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