Tax and pension reforms changing the numbers for property investors

PARRAMATTA, AustraliaJuly 20, 2017PRLog — After the May Budget, the regulators could still pose an impediment to property investment success. The new financial year is here and investors could face even more difficulties because of slowing prices and flat rents. The costs of the ledger has worsened and investors may be in trouble soon.

The regulators demand that banks hold more capital on their books.

Investors may have to pay 0.5% on top of a first home buyer rate under the latest mortgage pricing tables Interest-only loans are held up by up to 40% of recent market entrants, making an interest and principal loan more appealing now than an interest-only loan.

Some superannuation changes may work against property investment, including the new concessional limits of $100,000 per annum.

Placing an investment property in a superannuation fund by yourself has become a multi-year, more complex and elaborate process. People may use their super to save for a property but those using salary sacrifice to build a deposit would have to wait for a long time because the new maximum salary sacrifice is $25,000 a year.

Pension access changes may also be against property investment because the family home is now excluded from pension benefit calculations but investment property assets are included.

Retirees may be better off selling their investment property and putting the proceeds into the family home. This will improve their pension benefits especially if their superannuation is in the $400,000 to $1.05 million range.

Meanwhile, ATO is now keeping their eyes on property investors rather than multinationals, saying the former could be worth more than the amount the agency gets from multinationals.

It has launched its negative gearing operation only months after the federal government brought in two huge reductions to tax arrangements which property investors heavily rely on. Depreciation deductions have been greatly reduced and investors may not claim travel expenses related to their property investment anymore.

The numbers are changing for property investors and keeping negative gearing may no longer matter if the numbers are not stacking up. For more information about property investment in Australia, contact a Specialist (…)to discuss your particular circumstances.

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