the impact of the federal budget 2017

Information for investors in affordable housing:

  • A concessional Managed Investment Trust (MIT) rate will be available on acquiring, redeveloping, or constructing affordable-housing property from 1 July 2017. Affordable-housing property is that which is leased to low-moderate income earners at below-market rent.
  • The Capital Gains Tax discount has risen from 50% – 60% for residents who invest in affordable housing managed by a registered community housing provider from 1 Jan 2018.

Information for developers:

  • A Commonwealth Property Register will be introduced, providing a mechanism for the private sector to make proposals for development of Commonwealth land.

Information for foreign owners:

  • Foreign ownership of new developments will be capped at 50% from 9 May 2017.
  • An annual charge on unoccupied property will be introduced from 9 May 2017. Unoccupied property is that which has been either vacant, or not genuinely available for rent, for half of the year. The charge will be equal to the foreign investment application fee imposed at the time the property was acquired.
  • Capital Gains Tax (CGT):
    • The main residence exception to the CGT will be abolished from 9 May 2017 for foreign and temporary tax residents. For existing properties, this will take effect as of and from 30 June 2019.
    • The CGT withholding regime has changed, effective 1 July 2017, with the withholding threshold for properties reduced from property sale price of $2 million to only $750,000, and the withholding rate increased from 10% to 12.5%.

Other key measures:

  • For purchasers of newly built residential properties, GST must be remitted directly to the ATO a part of settlement from 1 July 2018.
  • For landlords who travel to inspect or manage their rental properties, the deductions for travel expense will be removed from 1 July 2017.

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