However in this budget, the screws will be further tightened on foreign investors by cutting their access to the main residence capital gains tax exemption when they sell a property, and slapping a $5,000 levy on any who fail to occupy or lease their property for at least six months.
The Housing Industry Australia (HIA) welcomed the budget measures as good steps toward increasing housing affordability.
However, HIA deputy managing director Graham Woolfe said the organisation was concerned about negative impacts on residential building from the budget’s measures on foreign investment.
“Plans to tax vacant homes, limit the share of foreign investment in new projects and increase foreign investor duties all send exactly the wrong signal to potential investors in Australia,” he said in a statement.
“Barriers to investment are not productive for the building industry or the economy more broadly; investment needs to be encouraged.”
The rules for local investors are also to be tweaked to end tax deductions for travel expenses and limit depreciation deductions on items such as dishwashers and ceiling fans for those who have negatively geared properties.
Mr Morrison avoided making any significant change to long-standing but controversial negative gearing rules, apart from ending tax deductions for travel and limiting depreciation deductions on items such as dishwashers and ceiling fans for those who have negatively geared properties.
“Whether you are saving to buy a home, spending a high proportion of your income on your rent, waiting for subsidised housing, or you’re homeless, this is an important issue to you,” Mr Morrison said.
“There’s no silver bullets to make housing more affordable. But by adopting a comprehensive approach, by working together, by understanding housing needs, we can make a difference.”
The Federal Budget 2017/18 was released, please click here for HIA’s Budget Briefing note.