Budget will take drive out of resi investment

Measures designed to eliminate certain deductions for property investors are predicted to remove pressure from the market

Budget will take drive out of resi investment



Measures introduced by Treasurer Scott Morrison in the Federal Budget on Tuesday to remove certain deductions for investors have been touted as removing pressure from the residential property market.

In a Deloitte webcast on the Australian Federal Budget yesterday (10 May), tax partner David Watkins discussed how prospective restrictions announced on depreciation deductions for equipment and plant finance would limit this to actual outlays within a residential property.

“The government is concerned when someone buys property that equipment is being depreciated multiple times by multiple owners.”

With these restrictions in place, subsequent property purchases would not be eligible for these tax depreciation deductions.

“This will take some of the tax drive out of residential investment.”

Proposed changes to managed investment trusts (MITs) were also interesting, Watkins said, with new rules added to ensure investment in affordable housing will qualify.

He continued, saying the entire scope of MITs had been reshaped in order to “focus investment” into the affordable housing space.

Finally, taking capital gains tax concessions from foreign buyers was a technical amendment by the government that was both niche and targeted.

“It’s interesting to observe how the government is responding to concerns,” Watkins said.

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