What the latest budget means for property.
The Federal Government recently released the 2018 budget, and luckily for property investors, there haven’t been any major changes.
In fact, according to Nathan Birch, renowned property investor and co-founder of Binvested,
“It’s the most boring budget that I’ve seen.”
“The good thing,” he continues, “is that there is nothing bad in there for property investors.”
While the Federal Government hasn’t offered any new incentives for investors, they haven’t touched the existing tax legislations.
They also haven’t done anything much to help first homebuyers crack the market.
Here are the biggest budget items around property.
Budget breakdown for property investors.
- Negative gearing untouched.
Despite recent debate over negative gearing, the Government has avoided changing the current property taxation system.
- CGT has remained the same.
Like the rules around negative gearing, capital gains tax has been left as is.
- Government has offered measures to increase affordable housing and housing supply.
These include establishing the $1 billion National Housing Finance and Investment Corporation (NHFIC) in an attempt to expand the community housing sector. This is aimed at providing more Australians with affordable rental housing.
The Government has also committed to releasing more land suitable for housing. According to the Budget overview, as many as 400 homes and a greater supply of land will be made available in the metropolitan Brisbane area.
- $75 billion will be invested in transport infrastructure over the next ten years.
$24.5 billion of this will go towards new major transport projects, such as the Brisbane Metro project, a Melbourne Airport Rail link and the construction of the Western Sydney Airport. The Federal and state Governments will be equally funding the first stage of the North South Rail link in Sydney’s west.
- Tax incentives for vacant land have been cut back.
From July 2019, property owners sitting on vacant land will no longer be able to claim expenses such as council rates and maintenance costs in their tax returns. This budget measure is reportedly aimed at discouraging land banking.
Keeping the cement mixers rolling.
Nathan had predicted an increase in government spending on infrastructure during a period of economic slowdown. He likens it to a stimulus – “To keep those cement mixers rolling, to keep the form workers going, the engineers going – to pick up some steam from the property market.”
He says the tax cuts that will roll out over the next decade are also something of a stimulus package. But, while $500 a year only equates to an extra $10 each week in spending money, it may be enough to boost consumer confidence and keep the economy going.
He doesn’t think the land banking cut backs will have a major effect on investors, as the only way running costs were claimable is if they were rolled over and amortized at the time of sale.
In fact, Nathan says that he doesn’t think the budget will have a major negative or positive effect on property. It was a bit of a nil event, he says.
Take matters into your own hands.
Budget aside, it is important to take your financial future into your own hands. According to Nathan, we are coming into an uncertain future and possibly a GFD.
Devise your own yearly budget, and decide how you will take yourself to financial freedom during these economic times.
Are you ready to Exit The Matrix?