Hand-outs for property owners and home buyers in State Budgets

By Bob Wilson, 6th July 2010

There's not much for property lobby groups to grumbleabout in various Federal and State budgets handed down in May and June, withfirst-home owners once again the winners.

Valuation and advisory firm Opteon points to the Federal Budget's variations of theFirst Home Savings Account scheme. The scheme previously required FHSA holdersto keep the money in the account for four years before buying a home.

Account holders will now be allowed to buy their firsthome at any time before the expiry of the four-year minimum holding period.Accumulated savings can to be paid into an "approved" mortgage at the end ofthe four-year period. Federal Budget aimed to give property an overall boostwith the review of its Capital City Strategy Planning Scheme and the NationalPopulation Strategy and the $5.6 billion infrastructure fund.

Victoria's State Budget extended its land tax exemption toinclude the construction phase of aged care and retirement facilities. And Victoria's First Home Owners will be able to applyfor $20,000 when building a new home in Melbourne or $26,000 if building orbuying a new home in regional Victoria. Opteon picked up on the pledge toinvest $4.3 billion jointly with the Commonwealth in a new regional rail link.Towns like Bendigo, Ballarat and Geelong will effectively become commutersuburbs with the advent of express rail services to Melbourne.

WesternAustralia's contribution to propertyincludes a $41 million investment in the Perth Citylink project, $21 millionover four years for planning design and due diligence for the Perth Waterfrontredevelopment and $81 million to be spent on the upgrading of the Great EasternHighway and the ongoing duplication of the Dampier Highway.

The ACTGovernment forecast a four-year residential programme to release 17,000  dwelling sites, starting with 5,000 sites in2010-2011 and another 5,000 in 2011-2012 to meet demand.  The ACT Government is also aiming to releasecommercial and industrial land with a target of 110,000 square metres per annum on average for each sector.

The NSW Governmentreceived plaudits from the usually critical Property Council of Australia forits package of stamp duty cuts, which include abolishing stamp duty for ‘offthe plan' purchases for homes worth up to $600,000.

There is a 25% cut in stamp duty for homes underconstruction or newly completed up to a value of $600,000. The over-65s avoidstamp duty altogether on new homes up to the value of $600,000. Once again,First Home Buyers benefit, being eligible for the stamp duty cuts (they werenot eligible for a 50% cut in duty on new homes in last year's Budget).

The NSW PCA actually claims credit for the abolitionof stamp duty on ‘off the plan' purchases, saying it was the centerpiece oftheir pre-budget advocacy. The new measures should, says the PCA, helpaccelerate supply.

Queensland's PCA was less effusive about their StateBudget delivered in June, saying the overall 29.7% increase in land tax tookthe tax load to $1.047 billion. The threat of increased land taxes at a time ofdecreasing property values would have a very significant impact, the PCA says.

For all that, the Queensland State Budget introducedsome land tax reforms, allowing tax payers to pay land tax bills quarterly andincreasing the payment period from 30 days to 90 days.

SouthAustralia's budget has been postponedto September as a result of the March election there, but Tasmania's Budget was released in mid-June.

Tasmania stole the thunder from just about everyonebar the Federal Government, predicting a $24 million operating surplus thisfinancial year (although a return to deficit is predicted by 2010-2012). TheApple Isle says it will return to a $32 million surplus in 2012-2013 and madethe (rare in global terms) claim of being net debt free. So no doubt Tasmaniacan afford to hand out $28 million to land owners and first home buyers  with a range of changes to the land taxsystem.

From 2010-11, a new land tax rate of 1.5% will beapplied on land values over $350,000. This represents a 0.5% reduction on landvalued over $350,000 and up to $750,000, and a reduction of 1.0% for landvalued at over $750 000.

From 2010-11, additional land will be exempt from landtax. Qualifying shacks with assessed land value of $500,000 or less andbusinesses operated from home will both be exempt from land tax.

The Tasmanian Government also decided to allow thoseeligible for the First Home Owner Grant who construct and occupy a dwelling asa principal place of residence a rebate for up to two years' land tax paidprior to the date of occupation.

ENDS