The Turnbull Government has today secured passage of significant reforms announced in the 2017 Budget which will help address housing affordability and assist private renters.
The Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 implements an annual vacancy charge on foreign owners of residential real estate where property is not occupied or genuinely available on the rental market for at least six months in a 12 month period.
The vacancy charge builds on the Turnbull Government’s strengthened foreign investment regime to increase the number of houses available to live in. The charge provides a financial incentive for the foreign owner to make their property available on the rental market, helping provide more homes for Australian families.
The vacancy charge applies to foreign persons who make a foreign investment application for residential property from 7:30 PM (AEST) on 9 May 2017.
The Australia Taxation Office, responsible for residential real estate applications under the foreign investment framework, will administer the vacancy charge.
The legislation also enacts better targeted deductions relating to residential investment properties.
Restoring integrity to the tax treatment of residential investment properties, the changes disallow claims for travel expense deductions and limit plant and equipment depreciation deductions to assets not previously used.
From 1 July 2017, travel costs for individual investors inspecting and maintaining residential investment properties will no longer be deductible. This will improve the integrity of the tax system by preventing residential property investors from taking holidays at taxpayers’ expense.
Limiting plant and equipment depreciation deductions will remove the existing opportunities for items to be depreciated by multiple owners in excess of their actual value.
Together, the travel and plant and equipment deduction changes will improve the integrity of the tax system and are estimated to generate $800 million in budget revenue over the forward estimates.
We are already seeing evidence that tighter restrictions on investment lending are helping take pressure off Australia’s housing market. The reforms passed today are a further illustration of the Government’s commitment to improving housing affordability for Australians.
Treasury.Source: The Commonwealth of Australia