With the election race finally being run and the election of a new Labour government, there are a lot of questions being raised as to what might be the knock-on effect to the property market? But whilst we will really need to allow sometime for the dust to settle here’s what we know so far….
Any Taxes on Property coming?...
Following the hiding that the Labour party copped at the 2019 election which was largely attributed to their well publicised intention to make changes to negative gearing and potentially abolish capital gains tax concessions, the thought of property tax reform frankly leaves any ministers feeling very nervous. Labour ministers will likely feel they tested the mood of electorates last time on these issues and there was little appetite for it. It’s not expected that these items will make their way back onto their agenda presently.
First Home Buyer Incentives
Labor has announced the introduction of an equity contribution scheme to help first homeowners get a foot on the property ladder. Eligible home buyers will need a minimum deposit of 2 per cent, with an equity contribution from the federal government of up to a maximum of 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home.
You will be eligible for the scheme if you:
- Are an Australian citizen of at least 18 years of age
- Earn $90,000 or less per annum for individuals, or $120,000 or less per annum for couples
- Live in the purchased home as your principal place of residence
- Don’t own any other land or property – in Australia or overseas
- Have saved the required minimum two per Cent deposit of the home price and qualify (and can finance) the remainder of the purchase through a standard home loan with a participating lender
- Pay for any associated purchase costs like stamp duty, legal and bank fees. Homebuyers will also be responsible for ongoing property costs like rates, strata and any other bills.
During the loan period, the homebuyer can also buy an additional stake in the home, when they are able to do so. The minimum stake that a homebuyer can opt to purchase at any one time is five per cent.
If the homebuyer’s income exceeds the Help to Buy annual income threshold for two consecutive years, they will be required to repay the government’s financial contribution in part or whole as theircircumstances permit. (Courtesy H & R Block)
What about Tax Relief?
Labour looks to be proceeding with the recent Income Tax reforms that had been announced by the previous Liberal government.
Since the legislated “stage 3 tax cuts” have already been locked in the 32.5% marginal tax rate will be cut to 30% for those earning between $45,000 and $200,000.
The move itself means that there’s a potential gain of $1,125 per year for an individual on $90,000, which rises to $9,075 per year for a person on $200,000 or more. Additionally, the abolition of the Low and Middle Income Offset has been locked in, so those who currently receive it will notice what’s effectively a tax increase when they lodge their 2023 returns – which could be a rise of up to $1500 for those that are entitled to the full offset.
It’s early days, but that’s what we know so far…..
* This information is general in nature and not intended to be financial advice.
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