Budget roundup 2018–19 and tax — What property investors need to know

Drafted in November 2017 and enacted in April 2018, Ken Morrison, CEO of the Property Council of Australia claimed this was one of the biggest changes to how GST is collected on property.

“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

Queensland

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.

NSW

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.

South Australia

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.

Tasmania

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.

ACT

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.