From 1 July, the property landscape will undergo a major shakeup, resulting in multiple changes to duty concessions/exemptions and procedures.
We have identified the following changes that will have the greatest impact:
- First-Home Buyers: Stamp duty is to be abolished for first-home buyers purchasing a property up to $600,000. A duty concession on a sliding scale will also now be available to first-home buyers purchasing property valued from $600,001 to $750,000. The closer the dutiable value is to $600,001, the greater the concession available. For example, the duty payable on a property valued at $605,000 will be $1,046 after the concession.
- Off-the-plan concession: Previously purchasers of off-the-plan properties benefited from a reduced rate of duty because the property was yet to be built at the date of purchase. This concession will now only apply to purchasers eligible for the principal place of residence or first home buyer duty exemption/concession.
- Property transfers between spouses/de facto partners: Spouses/de-facto partners can no longer transfer any type of property between themselves duty-free. The exemption now only applies to principal places of residence and for transfers following a relationship breakdown.
These changes will affect all contracts entered into on or after 1st July 2017. Further information can be found at the State Revenue Office (SRO) website.
Land Transfer procedures are also being overhauled with the introduction of new Transfer of Land forms. Gone are the days where original signatures were required by all parties. As of 1st July, Transfers will be signed by your solicitor/conveyancer on your behalf. You may have already received a Client Authorisation form from us before, providing us with your authority sign on your behalf. In a mobile society, this change is most welcome.
Together with the changes to duty concessions, the SRO is also streamlining their forms. There will no longer be multiple duties forms for your signature, with the SRO bringing in an all-in-one form for your completion. These forms can be signed both electronically and by hand for your convenience.
Finally, the ATO are delving further into the property space with their efforts to capture otherwise lost CGT. All vendors of property valued over $750,000 will now have to provide purchasers with an ATO clearance certificate proving that they are not a foreign resident vendor. Vendors who fail to do so risk losing 12.5% of their sale price to the ATO.
The 2017 Federal Budget is seen as a political budget that aims to put Australia back on a course to a surplus, while also having a strong chance of being approved in the Senate.
As a result, it is a mixed bag of pluses and minuses, with no major surprises or structural changes. Here are some key take-outs relevant to individuals:
- The Pensioner Concession Card will be reinstated for pensioners who lost their pension under the revised asset tests that came into effect in January 2017.
- In an attempt to tighten up on pensions, Australians will be required to have 15 years of continuous residency to be eligible to receive a Pension.
- The Medicare levy will be increased from 2% to 2.5% from 1 July 2019.
- To encourage retirees to sell their homes and downsize, they will be able to make a non-concessional contribution into superannuation of up to $300,000 each ($600,000 as a couple) from the sale proceeds.
- First home buyers can use superannuation to save tax effectively for their deposit by making voluntary concessional contributions that can be withdrawn along with associated earnings at the time of purchase.
- In an attempt to discourage overseas buyers, new charges will be applicable to foreign owners if their property is not occupied or available to rent for at least six months if the year. In addition, foreign and temporary tax residents will no longer be eligible for a CGT exemption on their main residence.
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