The May Budget included the below measure to tax foreign owners that leave their properties vacant:
The Budget also included measures aimed at limiting the deductions that can be claimed by property investors:
Yesterday, these measures passed the Senate with Labor support:
Summary
Introduced with the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017, the bill amends the: Income Tax Assessment Act 1997 to: provide that travel expenditure incurred in gaining or producing assessable income from residential premises is not deductible, and not recognised in the cost base of the property for capital gains tax purposes; and limit deductions for plant and equipment assets used for producing assessable income from residential premises to when the asset was first used for a taxable purpose; Foreign Acquisitions and Takeovers Act 1975 to implement an annual vacancy fee on foreign owners of residential real estate where residential property is not occupied or genuinely available on the rental market for at least six months in a 12-month period; and Taxation Administration Act 1953 to make consequential amendments.
Moreover, the Senate continued to block the Government’s scheme to allow first-home buyers to save for a deposit through their superannuation, which would have been mildly inflationary for prices:
So overall, this set of reforms represents a modest win for both the Budget and housing affordability. They will remove some speculative demand (albeit at the margin), while raising some $820 million over the forward estimates.
