June 29th, 2017
Victoria and NSW are taking new measures to support first home buyers
As we are sure you’re aware, the state governments in NSW and Victoria to make some changes to support first home buyers. Some of these changes also impact investors and Australian property vendors living overseas, as both governments seek ways to fund the new measures. We’ve provided an outline of the changes below. For more information, or if you have any questions, please contact your local Compliance Support Manager.
Changes to support first home buyers in NSW will take effect from July 1
The NSW State Government is introducing new measures to assist first home buyers from July 1, 2017. These changes are specific to owner-occupiers and designed to make it easier for people to purchase a first home. They include:
To fund the first home buyer affordability measures, the following changes will be made that will impact other investors:
Changes to stamp duty and grants in Victoria effective from July 1
The Victorian State Government has recently introduced changes to stamp duty and grants in order to support first home buyers and encourage them to purchase property in regional Victoria. These changes include:
Changes to the new capital gains withholding regime
Legislation was introduced last year to combat low levels of compliance by foreign residents paying tax in respect to Australian capital gains. Last month, the Commonwealth Government introduced significant changes to the current scheme so that from July 1, 2017 it will apply to the sale of all real estate over the market value threshold of $750,000 and will require purchasers to withhold an increased amount of 12.5% of the purchase price.
Australians are deemed to be foreign residents for tax purposes if they do not reside in Australia. For example, expats who have set up a permanent home in another country. Expats must declare any income earned in Australia including any capital gains. Any expats considering selling their home or investment property in Australia, with a market value above $750,000, will be caught by these proposed new laws. The recent changes also affect vendors who co-own property with expats or other foreign residents, as the purchaser will be required to withhold an amount proportional to the foreign resident’s interest in the property.
If your client is intending to move abroad permanently and sell their property later, they may need to rethink the timing of the sale – particularly if the property has been their principal place of residence, as this would usually be exempt from any capital gains tax if they sold it when they were residing in Australia. There are some variations, so if your client could potentially become an expat vendor, they should seek advice from their lawyer or tax accountant.
Source: LawLab Conveyancing www.lawlab.com.au