Foreign investors to feel the heat most from July 1 tax changes

The new financial year has started with a slew of new or amended taxes, rules, grants and concessions, related to property, especially for foreign investors.

Federal changes  

• First home buyers will be able to access specific voluntary contributions made in to superannuation after 1 July 2017. The voluntary contributions will be accessible by individuals from 1 July 2018. 
• There is a cap of $15,000 per year on the contribution to superannuation and a total of $30,000 can be contributed to the super fund. 
• Foreign tax residents will be charged a higher Capital Gains Tax withholding rate of 12.5%, up from 10%, and a reduced CGT withholding threshold of $750,000 (down from $2 million).
• ATO will disallow deductions for travel expenses relating to inspecting, maintaining, or collecting rent for a residential rental property.
• The major banks CBA, Westpac, NAB, ANZ and Macquarie will be charged a levy that is expected to add raise more than $6 billion and it is anticipated that there will be flow on increases in home and commercial lending rates.
• In addition to these federal tax changes, there are state tax changes as well that will come into force from July 1.

NSW

• The biggest changes are stamp duty concessions in NSW, with the tax abolished for first home buyers on existing and new properties up to $650,000 while discounts apply for properties up to $800,000. The First Home Owners grant is also available to new homes up to $600,000.
• Also, only FHBs benefit with concession on residential off-the-plan purchases, getting up to 12 months to pay.
• Application fees for foreign purchases of residential properties worth less than $10 million will also rise by 10 percent on the current fees.
• In addition, vacancy taxes kick in for unoccupied properties more than six months. The charge will be equivalent to the relevant foreign investment application fee imposed on the property at the time it was bought by the foreign investor.

VICTORIA

• First-home buyers in the city can get a $10,000 First Home Owner Grant but the state has incentivised buying in regional Victoria with a doubling of the grant.
• Stamp duty abolished for first-home buyers for homes up to $600,000 and reduced for homes priced up to $750,000.
• Victoria also launched a ‘Homes for Victorians’ pilot scheme where the state will co-purchase the home with the state government
• For off-the-plan concessions, only first home buyers who entered into contracts from 1 July 2017 will be eligible.
• The existing stamp duty exemption for transfers of properties between spouses will be removed (but the existing stamp duty exemption applicable to transfers of principal places of residence between spouses, and transfers following a relationship breakdown, will remain).
• The state also announced earlier this year a vacancy tax to charge investors who leave their properties vacant for a length of time as a means to increase supply.

ACT

• The ACT has also announced a land tax on vacant properties from July 2018.
• Meanwhile, there will a rate rise of 7 percent on average from what the  government collects for Canberra homes. Unit rates will rise by an even higher 19 percent the coming financial year as the government changes the way it calculates rates for apartments and units. However, there is a $100 rebate to unit and apartment owners.

QUEENSLAND

• In Queensland there will be a 1.5% surcharge for absentee payers of land tax, applying to land holdings of $350,000 or higher in addition to other land tax payable (does not apply to Queensland residents but anticipated to impact on property investment), according to a blog on Queensland Economic Advocacy Solutions (QEAS).
• The state has also completely cut stamp duty on first-home buyer purchases of $600,000 or less and reduced it for homes priced up to $750,000.
• To assist first home buyers entering the housing market, the Queensland First Home Owners’ Grant is being temporarily increased from $15,000 to $20,000 for contracts on newly constructed homes entered into between 1 July 2017 and 31 December 2017.  

NT

• There’s an increase in the maximum stamp duty rate (from 5.45 percent to 5.95 percent) for conveyances, including landholder duty, for contracts signed on or after 1 July 2017 where the dutiable value is $3 million or more but less than $5 million, the rate is 5.75 percent of the dutiable value and where the dutiable value is $5m or more, the rate is 5.95 percent of the dutiable value, the eliteagent.com.au reported citing KPMG.
• Meanwhile, first home buyers will see stamp duty abolished on purchases of homes up to $500,000, while discounts would be applied for properties up to $650,000, on established homes. 

TASMANIA

• The fee for issuing a Land Tax Search certificate will increase from $11.47 to $11.62 from 1 July 2017.
• The first home owner grant of $20,000 has been extended one year from 1 July 2017 to 30 June 2018.
• The Tasmanian government announced partial duty relief for most types of house and land package purchases, through amendments to be made to section 19(2) of the Duties Act 2001 which come into effect on 1 July. These are mostly to do with calculations as they relate to improvements, the Elite Agent said citing the state Treasury and Finance department.

SOUTH AUSTRALIA 

• Foreign investors have been slugged with a 4 percent conveyance duty surcharge on residential properties from 1 Jan 2018.
• Stamp duty concessions of $15,500 for off the plan apartments have got a one-year extension.
• Further, first homebuyers who purchase off-the-plan could be entitled to more than $40,000 in assistance under state government measures to stimulate jobs and activity in the building industry. People who have previously owned a home will be eligible to receive up to $25,500.
• In a reprieve to investors, there will be no land tax for five years if they buy eligible off-the-plan apartments.
• A new $10,000 pre-construction grant for the next three months for off the plan apartments in buildings yet to be built is being introduced.

 WA

• First home buyers will see their grant being slashed to $10,000 from the current $15,000. 
• First home buyers purchasing a new or established home will continue to be exempt from duty on homes valued up to $430,000 or vacant land valued up to $300,000, and to receive a concessional rate of duty on homes valued up to $530,000 or vacant land valued up to $400,000.

In addition, there are other changes as well. 

The National Housing and Homelessness Agreement (NHHA) will replace the National Affordable Housing Agreement (NAHA) from 1 July 2018 and will combine funding currently allocated under the National Affordable Housing Specific Purpose Payment (NAHSPP) and the National Partnership Agreement on Homelessness (NPAH).

The NHHA will target jurisdiction-specific priorities including supply targets, planning and zoning reforms and renewal of public housing stock while also supporting the delivery of frontline homelessness services. Funding for both the housing and homelessness sectors will be ongoing and indexed.