2017 Budget Summary in 90 seconds
We hope you enjoy our 90 second Black and White Finance summary of Scott Morrisson’s 2017 Budget announcement. This summary is from a property and finance perspective.
From 1 July 2017, eligible first home buyers will be able to make voluntary contributions to their superannuation accounts up to $15,000 per year and $30,000 in total. These amounts specifically can be used as a deposit for their first property. An initiative that can really boost our first home buyer saving levels and help put some real discipline around it for them. These contributions are taxed at 15% and the specifically withdrawn amount from super is taxed at a marginal rate. There is much debate around this initiative at the moment. Some are asking the questions if $30,000 will even touch the sides in Sydney or Melbourne, others are suggesting it's an initiative cutting into their future. My perspective is that first home buyers are getting a better return plus less tax on the same amount invested in super as opposed to a regular account, so it's a step in the right direction from our government nevertheles. First home buyers liaise with your employer and accountant about this salary sacrificing arrangement to make pre-tax contributions for your first property purchase.
Good news for property investors is that negative gearing is staying!
There is a ban however on travel expenses being used as deductions, which is a loss because a lot of investors have properties that are long distances away from their home. So, transport expenses related to maintenance, inspection or potentially collecting rent from 1 July 2017 cannot be claimed as a deduction.
Also from 1 July 2017, depreciation deductions for plant and equipment items such as ceiling fans and washing machines, will only be allowed if you can prove to the ATO that you as an owner bought them with your own money.
The budget supported a second airport in Sydney at Badgerys Creek. It’s anticipated to cost $5.3 billion and will likely open in 2026. Is it time to invest out there? $3.6 billion for infrastructure in Western Sydney and a further $1 million by 2030 has been budgeted for, to boost population growth in the region.
Foreign investors who buy property and leave them vacant will now be charged if the property is not occupied or available to rent for at least 6 months in each year the property is owned. This starts now to try and increase the number of houses Australians have to live in.
From 1 July 2018, retirees (aged 65 and over) can contribute to the housing shortage supply in Australia by freeing up larger homes for younger families and selling up. These homeowners specifically, will be able to downsize and contribute their proceeds of the sale into their superannuation. This is a non-concessional contribution to a maximum of $300,000 (per eligible person).
Childcare, healthcare and employment were a strong focus along with small business, aged care and agriculture, however, this blog was tailored to property and finance for individuals and the impact our budget could potentially have on them.
Did that take 90 seconds?
Peter Vassilis
Black and White Finance