2017 Federal Budget- Negative Gearing

Posted on: 18.05.2017

Good new’s for investor’s only some minor changes to Negative Gearing in this years 2017 Federal Budget.

Negative Gearing

Negative gearing remains however some rules have been tightened around what can be claimed, specifically travel expenses and depreciation deductions.

Under new rules coming into effect from 1 July 2017, depreciation deductions for plant and equipment items such as washing machines and ceiling fans will only be allowed if the investor actually bought them.

The “integrity measure”, which is intended to address concerns that such items are being claimed as tax write-offs by successive investors in excess of their actual value, is tipped to claw back $260 million over the next four years. The changes will apply to any items purchased after budget night, but existing investments will be grandfathered.

Meanwhile, investors will no longer be able to claim tax deductions for travel expenses “related to inspecting, maintaining or collecting rent for a residential rental property” from 1 July 2017.

Ghost house tax will be imposed on foreign investors who leave properties vacant

To discourage foreign investors from buying residential properties and leaving these vacant, the Government will now charge foreign owners of residential properties an annual charge if the property is not occupied or available to rent for at least six months in each year.

This is expected to increase the number of homes available to Australians wishing to rent. The annual vacancy charge will apply to foreign persons who make a foreign investment application for residential property from 7:30 pm on budget night 2017.

Where a foreign-owned residential property is left vacant for more than six months in a year, a charge will be levied on the foreign owner equivalent to the foreign investment application fee which was paid at the time of application.

The new charge builds on the Government’s existing foreign investment regime which seeks to increase the number of houses available for Australians to live in. The charge provides a financial incentive for the foreign owner to make their property available on the rental market if they do not intend to reside there.

This will be administered by the Australian Taxation Office.

Summary thank’s to ING’s treasurer Michael Witts.