Published on: 2010-08-24

Budget Review

Budget ReviewBudget Review

The effects of the budget on residential property investment will have been well-digested by most clients.  In short, property investors can breathe a collective sigh of relief.

There will be no:

  • Capital gains tax
  • Ring fencing of tax losses
  • Deemed rate of return tax
  • Land tax

Although the removal of depreciation claims on buildings will have an impact on some investors, it is not the primary reason investors choose residential property. As the depreciation claims were subject to claw-back at time of sale, many investors chose not to claim it. However, the speculation about changes in the lead- up to the budget did serve to slow investment in housing, and investors appear to have been leisurely in returning since the budget’s delivery. However, it is apparent some of our more astute owner-clients are buying again – attracted back to the market by properties that sport extremely desirable yields. The investors’ focus, as always, is on the economic reality of the investment, but this is admittedly tempered by reduced tax savings (previously bolstered by depreciation claims).