The property lobby’s opposition to the Federal Budget’s modest changes affecting foreign buyers of residential property continues in earnest, with the Real Estate Institute of Australia (REIA) now complaining that the changes affecting capital gains tax (CGT) will increase real estate agents’ workloads. From The AFR:
Under the government’s new regime the withholding rate on capital gains tax that foreigners must pay when they sell property will increase to 12.5 per cent from 10 per cent and the threshhold for foreign resident capital gains tax withholding will reduce to $750,000 from $2 million.
REIA President Malcolm Gunning said the incoming threshhold of $750,000 is too low and will create piles of work for agents and conveyancers. He said a reduced threshold should be “no less than $1.5 million”.
“Based on data in the latest Foreign Investment Board Annual Report, 76 per cent of foreign purchasers bought in NSW and Victoria, and the average purchase price was $1.6 million…
“The proposed $750,000 threshold means that half the properties sold in Melbourne and Sydney will be subject to the withholding provisions yet foreign investors are buying properties at double this value.”
The reduced threshold means more agents will need to be employed and extensive education will need to be administered to help agents understand the new rules.
Below is the Budget’s measure affecting CGT for foreign property buyers:
This measure is expected to have a major impact on Budget revenue, raising $581 million over the forward estimates – money that is desperately needed to reduce the Budget deficit.
The only “cost” is that REIA members – who have made out like bandits thanks to the housing bubble – will have to do a bit more paperwork and actually work a little bit harder for their money. Big deal.
The federal government should tell the REIA to take a long walk off a short pier.
