What Does This Year’s Federal Budget Mean For Property?
The Australian Budget shows the Government’s economic, political and social priorities and their intentions to achieve them. The recent release of the 2018-2019 Federal Budget breaks down the government’s expected expenditure of $488.58 billion in the next financial year across all industries.
What Does This Year’s Budget Mean For Property?
There has been minimal changes to the property taxing system with no changes to capital gains charges or negative gearing despite pressure to overhaul the system. This move has been commended for ensuring stability within the property sector. Amanda Lynch, the CEO of The Real Estate Institute of Australia stated that the abolition of negative gearing would result in short supply of properties for rent, escalating rents and thus reducing opportunities for middle income earning Australians to create wealth for self-funded retirement.
Property owners that have been sitting on empty land will no longer be able to claim expenses such as council rates and maintenance costs in their tax returns. To ensure that property owners of vacant lots are not improperly claiming deductions for land that they do not intend to earn an income from, the Federal Government are denying deductions for costs associated with holding vacant land from July 2019.
The Government is satisfied with the cooling of the current property market as it is helping alleviate the strain on housing affordability. Investors are looking to prosper during this time as they will be getting a good price due to the supply of property. For first home buyers, the expected interest rate and inflation rate is expected to be stable.
As a commitment to boost housing supply, there are plans to establish a $1 billion National Housing Finance and Investment Corporation aimed to help finance infrastructure to increase the stock of affordable housing. The allocation of funds in transport infrastructure upgrades will also work to open housing options in further regional areas by making them more accessible.
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With external influences such as Federal Budget in this instance, the Government aims to respond to consumer, market and industry demands in the best interests of our population. Making positive changes that allow for greater accessibility to funds for investment, and first home buyer incentives, Sydney and Australia is slowly and steadily heading towards a more prosperous nation.