Property

What changes in the latest Australian Federal Budget 2017-18 will affect foreign investors?

Announced last month in May, the Australian Federal Budget contains a number of changes that will affect foreign investors in the future.

The majority of changes in the latest Federal Budget focus on Capital Gains Tax (CGT), limitations on foreign investments and clarification of Australia’s foreign investment framework.

 

  1. Capital Gains Tax (CGT) changes for foreign investors

Effective immediately, the Government will no longer allow foreign and temporary tax residents an exemption on paying CGT on their main residence.

However, all existing properties purchased prior to 9 May 2017 will also have their CGT exemption removed by 30 June 2019.

New changes affecting Home Buyers and Property Investors this year

The housing and property market is facing a radical shake-up as the Victorian Government implements changes to make property for buyers more affordable in the midst of a housing shortage.

The Good News

First home buyers are by far the winners in 2017 reaping great benefits from the government’s new property schemes. The two new schemes being introduced as of July are:

1. Stamp duty reduction for First Home Owners
The Victorian Government announced in March that first home buyers will be exempt from stamp duty tax if the property is valued at under $600,000.

3 Special Conditions to Watch Out For in Land Contract Sales

Everyone knows the importance of having a solicitor look over your land sale contract when buying your dream home. However, apart from the standard s32 conditions you or your solicitor should be aware of any special conditions attached to your sale of land contract. While special conditions are quite common and subject to mutual agreement by both purchaser and vendor, the way they are drafted may have severe impact on the execution of the contract especially if not looked at carefully.

What are special conditions?

Special conditions are additional conditions apart from the standard conditions in a Contract for The Sale of Land.

What happens if I can’t settle on my off-the-plan purchase?

Are you having trouble getting finance before your settlement date?

Is there a risk of failure to settle on your property?

The tightening of foreign lending by banks, the crack down on foreign investments by the federal government and the boom in apartment construction has resulted in the perfect storm of increased settlement risk.

While the demand for Australian property is still strong, it is prudent to be aware of the very real risk that it might be difficult to complete purchases in the current lending environment.

What will happen if you don’t settle?

What are your rights: Short Term Rentals

In a win for short-stay property operators and a disappointing outcome for Owner Corporations, the Victorian Supreme ruled recently that owner corporations could not prevent dwellings in a strata agreement from being used as short term rentals. We look at the impact of the case on your short term rental rights.

What are strata apartments?

Strata titles are a unique Australian innovation. It allows individual ownership of part of a property (usually the apartment/townhouse) and combined shared ownership of open areas (e.g. foyers, driveways) through a legal entity called the owners corporation.

Need to Know: New Foreign Resident CGT Withholding Tax

What is the change?

On Friday July 1 2016, the rules for all transacting dwellings and commercial property worth over $2 million will change. A 10% non-final Capital Gains Withholding tax will be incurred on these transactions at settlement. This will affect all transactions and including those by Australian Residents

The new legislation imposes an obligation on purchasers to withhold 10% of the purchase price and pay it to the ATO where a seller enters a contract after 1 July 2016.

Never be caught by unexpected changes in Australian property law.

How will the Stamp Duty Increase Affect You?

From the 1 July 2016, there will be an increase in stamp duty for foreign buyers from 3% to 7% in Victoria.

There will also be an increase in the land tax surcharge for absentee landlords from 0.5% to 1.5% for the 2016/2017 tax period.

Who is a foreign person?

A foreign person is anyone except

  • An Australian citizen
  • An Australian permanent resident
  • A New Zealand citizen with a temporary Australian Visa

When will the new stamp duty apply?

The new rate will apply to contracts entered into or after 1 July 2016.