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Budget for year 2017

Even before the 2017 state budget was handed down by Tim Pallas, the Victorian real estate fraternity was twitching with anticipation. Where would the government give and take?

Well, it’s all out in the open now, and it seems property investors are the hardest hit by the latest budgetary measures in the government’s attempt to free up housing for would-be renters that is otherwise sitting vacant. The new vacancy tax is expected to gross the Victorian state government about $80 million in revenue over the next four years and will come into effect on January 1, 2018, for properties left vacant this year.

Here’s a summary of the main changes:

First home buyers

· Superannuation changes – First home buyers will be able to voluntarily contribute up to $15,000 per annum and $30,000 in total to their superannuation accounts via concessional contributions which may later be withdrawn to assist with buying their first home

· The abolishment of stamp duty for first home buyers on properties up to $600,000 and cuts to properties up to $750,000

· The doubling of the First Home Owner Grant to $20,000 in regional Victoria

· The introduction of HomesVic assistance pilot, a co-purchasing program for up to 400 first home buyers who qualify for housing loans but do not have enough deposit to buy.

Investors and homeowners

· Downsizing incentive – If you are 65 or over you can make additional non-concessional contributions to your superannuation from the proceeds of the sale of your home

· Introduction of a Vacant Residential Property Tax – investor owners of properties left vacant for six months or more with pay 1% of a property’s capital improved value

· Abolishment of stamp-duty spouse transfer loophole

· Landlords and tenants will be able to negotiate long-term leases for those wanting to commit to rental arrangements for more than five year.

View more information about how the 2017 budget will affect the real estate industry here.

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