The continued deliberation about Negative Gearing decisions has come to an end with the Treasurer Scott Morrison handing down his first Federal Budget last night. As promised, Negative Gearing and Capital Gains Tax have remained unchanged, with Small Business and Infrastructure becoming the focus.
Real Estate Institute of Australia (REIA) and Real Estate Institute of Queensland (REIQ) have both announced their support for Budget changes this morning. The President of the REIA, Neville Sanders believes the 2016 Budget has recognised that the housing and construction sector have a role to play as the Australian economy moves away from a decade long dependence on mining for growth.
“Investment in dwellings is forecast to grow at 8% in 2016-17 and peak in 2017-18 with a record number of completions”, said REIA President Mr Neville Sanders.
“The boost to infrastructure spending, the extension of small business concessions, modest tax cuts and the retention of the current arrangements for taxation of property investments will help ensure that the property sector remains an important driver of economic growth.”
While REIQ Chairman Rob Honeycombe discussed the Government’s guarantee that Negative Gearing benefits and capital gains tax discount won’t change, saying it was a confidence-boosting measure and gave property investors and real estate professionals a level of certainty that these promises have been enshrined in the Budget.
“We know that property and construction are the two biggest drivers of the national economy, since the resources downturn, and it is good to see the Government acting responsibly to protect this pillar of the economy.
“Residential property is valued at about $6 trillion and is the single biggest asset class underpinning Australia’s wealth.
“Australia’s future prosperity rests on protecting this market and helping it grow and this Government’s promise to retain Negative Gearing benefits and the capital gains discount does that,” he said.
Mr. Sanders added “this recognises that the current arrangements increase the supply of housing for our growing population, keep rents affordable and eases the burden on social housing.”
“With forecasts of moderate growth, an improvement in the unemployment rate, inflation well within the RBA’s target zone, and yesterday’s interest rate cut the Budget is good news for home owners and prospective buyers,” concluded Mr Sanders.
Other good news in last nights 2016 Budget announcement, benefits for real estate agencies with the small business tax cut from July 1 this year. The rate has been reduced to 27.5 per cent, which will benefit the real estate sector, where about 80 per cent is made up of small business operators.
“Small business is the backbone of every local economy and when small business does well, the local economy does well. Real estate agencies make up a significant proportion of the local businesses within the economy so it’s gratifying to see measures put in place to help them grow and thrive,” Mr Honeycombe said.