THANK YOU MR ABBOTT – HOMEOWNERS + PROPERTY = WINNERS IN THE BUDGET 2014
Just because there were no glitzy dresses or solid gold trophies doesn’t mean that there were no winners at this fanciful affair. As Mr Hockey brought down a budget that hits middle Australia with swinging cuts & price hikes, it was refreshing to hear that homeowners dodged the bullet with multi-billion tax breaks failing to come under scrutiny. Investors can breathe easy, with negative gearing intact + there were no direct hits on the family home + the Government strongly outlined that it expects interest rates to remain low = happy, happy, happy.
Here’s the det’s…..
Great news for home owners & investors with the Government strongly outlining that it expects interest rates to remain low in the medium to long term, creating less need for its intervention to boost housing activity.
Also predicted was a surge in construction, so more stock coming onto the market will improve affordability, in fact the housing sector is beginning to respond to lower interest rates with a pick-up in prices & leading indicators of construction.
With negative gearing intact, investors can breathe a sigh of relief which we hope will stick around for some time.
No direct hits on the family home in this Budget, means homeowners can also breathe a sigh of relief. The CGT (Capital Gains Tax) tax-free status for owner-occupier homes remains untouched, & more significantly the family home was excluded in pension means testing.
The Commission of Audit had proposed to include the family home in the assets test from 2027-28, but the Budget statement was succinct that the Government will not include the family home in the means test for the Age Pension.
Consumer reaction to the Budget will have an immediate impact on buying & seller activity, which will become apparent within weeks through auction attendance levels & clearance rates.
Not the best news sadly for our 1st homies saving for a deposit, as they lose an incentive, with the scrapping of the First Home Savers Account (FHSA). Introduced by the Rudd government in 2008, it provided those saving for a deposit with tax breaks and co-contributions from the government. Under this scheme, savers paid concessional tax rates of 15% on interest earned in the accounts & the government made a 17 percent co-contribution on the first $6000 contributed each year. These government co-contributions to the accounts will end on July 1 & tax & social security concessions will be withdrawn from July 2015.
At the very least, this Budget presents an upside for mortgage holders with its austerity keeping rates lower longer.
HAPPY, HAPPY, HAPPY!!!!!!