In light of last night’s Budget there are three areas worthy of comment in relation to property and Home Loans;
1 The Bank Levy : as the Treasurer said in the pre-budget briefing “Cry me a river” (The Australian Wednesday 10th May Pg 1) when it was suggested the banks might be unhappy with the $1.5b a year levy on the major 5 (CBA, Westpac, ANZ , NAB, Macquarie). By way of a government initiated free kick, banks are currently reaping close to a $1.5b a year windfall from the “out of cycle” rate rises to curb investor lending. All the government is saying here is that they want the money for the budget. Banks will cry poor – but the money was never theirs. I agree with the Treasurer – and if banks try to recoup this from customers there is absolutely no justification.
2 First Home Buyers : First Home Buyers can now salary sacrifice to super up to $30k and then withdraw it to put towards a house deposit. Given that a First Home Buyers marginal tax rate might be 30c and that super is taxed at 15c, this means that your $30k might now be worth $36k (plus any interest earned). It’s a help but not a magic bullet by any means. Please talk to me about this interesting new option.
3 Investors : after much talk the significant change is that you can’t book your annual holiday up to “visit” your rental property in “Byron Bay” to the tax payer. That’s fair enough. If you want a holiday the tax payer shouldn’t be footing the bill. The government (in making such minor changes) is clearly saying they are delighted for us to be investing in property. In my opinion it is still the most reliable method to build wealth.
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