Budget 2017: Foreign property buyers squeezed
While first homebuyers were handed some relief by last night’s budget, foreign investors won’t be celebrating.
Last night’s Federal Budget contained measures aimed at easing housing affordability pressures and curbing foreign investment. New taxes on foreign investors are set to add more than $600 million to the budget over the next four years.
The AFR reports that under the new measures, foreign and temporary residents will lose their capital gains tax concession when selling their main residence, though homeowners who bought prior to the budget will be grandfathered until 30 June 2019. The CGT rate will also rise from 10% to 12.5% from 1 July.
Also announced was the mooted “ghost house tax”, penalising foreign investors who buy properties and leave them vacant. Property that sits empty for six months or more will attract a charge of at least $5,000.
The threshold for CGT for foreign buyers was also lowered. Foreign property owners will now pay CGT on the sale of properties worth $750,000 or more, while the previous threshold was $2 million.
The Budget also restricts the proportion of a new development that can be sold to foreign buyers. Now, developers will be bridled from selling more than 50% of new developments (50+ units) to foreign buyers.
The measures are intended to provide relief for owner occupiers competing for properties with investors. However, lobby groups such as the Housing Industry Association and the Real Estate Institute of Australia claim they could restrict rental supply and new home building by deterring investment in Australia.