We are well and truly into the new financial year now, and with it, a host of changes that could impact you as a homeowner or property investor in Australia.

This blog post aims to provide a comprehensive overview of the key changes in the FY2023-24 that could affect your property investments. Buckle up, and let's navigate these changes together.

Nationwide Changes

The Federal Budget 2023-24 has introduced several changes that could affect property investors and the housing market.

One of the most significant changes is the support for build-to-rent projects. The government has announced tax breaks to encourage these projects, including an increase in the depreciation rate from 2.5% to 4.00% per year for projects commenced after 9 May 2023. This means that if you're a property investor who starts a build-to-rent project after this date, you'll be able to depreciate your assets at a faster rate, potentially reducing your taxable income.

Additionally, the government is boosting social and affordable rental homes by committing additional funding to the social rental housing segment. This commitment includes increasing the National Housing Finance and Investment Corporation’s (NHFIC) liability cap from $5.5 billion to $7.5 billion from 1 July 2023. This could mean more opportunities for community housing providers to access lower cost and longer-term finance, potentially leading to an increase in the supply of affordable housing.

Furthermore, the government is increasing the maximum rates of Commonwealth Rent Assistance by 15%. This increase, the largest in over three decades, will benefit around 1.1 million households receiving this assistance. For example, if you're a renter receiving $100 per week in rent assistance, this increase could boost your assistance to $115 per week.

State-by-State Analysis

New South Wales (NSW)

In NSW, new laws are being considered that would require owners and agents to notify all rental applicants of offers higher than the advertised price. For example, if a property is advertised for rent at $500 per week, but a prospective tenant offers $550, all other applicants must be notified of this higher offer. This could potentially lead to a more transparent rental process, but there are concerns it could also encourage rental bidding wars.

Additionally, the first home buyers choice is being scrapped on 30 June 2023. This means that first home buyers purchasing properties up to $1.5 million will no longer be able to choose an annual property tax instead of paying duty upfront. However, duty exemptions will now apply up to $800,000 (from $650,000), and concessions will apply from $800,000 to $1 million (previously $650,000 to $800,000). This could mean significant savings for first home buyers. For instance, if you're a first home buyer purchasing a property for $750,000, you could potentially save thousands of dollars in duty.

Victoria (VIC)

In Victoria, the recently unveiled 2023-24 Budget announces proposals to reform Land Transfer Duty and Land Tax. A 10-year “COVID Debt Levy” is proposed to be implemented from 1 January 2024 on Victorian landholdings. This levy would place an additional annual fixed charge on landholdings, depending on their value. For example, if you own a property valued at $200,000, you could be facing an additional annual fixed charge of $975.

The Budget also proposes to replace transfer duty on sales of commercial and industrial properties with an annual property tax of 0.1% of the property’s unimproved land value[. This means that if you purchase a commercial property after 1 July 2024, you won't be liable for transfer duty, and the annual tax would be applied after a transition period of 10 years from the sale date. This could potentially encourage more businesses to invest in commercial properties in Victoria.

Western Australia (WA)

In Western Australia, amendments to the Western Australian Transfer of Land Act 1893 will commence from 7 August 2023, resulting in the removal of the requirement for duplicate certificates of title.

In the other states and territories, the changes have been relatively insignificant compared to those above, particularly in NSW and Melbourne.

Conclusion

As a homeowner or property investor, it's crucial to stay informed about these changes and adapt accordingly. While this blog post provides a comprehensive overview, it's recommended to seek professional advice to navigate these new regulations effectively.

The new financial year brings a host of changes that could impact homeowners and property investors across Australia. By staying informed and proactive, you can navigate these changes effectively and make the most of your property investments.

Ally Home Loans Pty Ltd is your ally in finance for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.

Book an obligation-free, complimentary consultation here today.

Ally Home Loans Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.