smoke-and-mirrors-dayBudget time is always a funny period as Australia halts whilst waiting for the proposal, which is then usually blocked by the opposition. Making it almost a waste of time unless they bribe the independents to vote for the bill. Forgive the cynicism, but it’s more than often pathetic!

So lets look at what’s been proposed on the finance & property front and how little thought these plans have had put into them.

First Home owners can put away pre tax savings now of $30,000 in a Superannuation like account. Now on the surface, this idea looks OK for those who could save the extra dollars per week. But on the flip side, University fees have just increased, which must also start being repaid when incomes reach $42,000. So if they manage to save a deposit, they may no longer service a loan from the banks due to increased debt commitment.

Property Plant and equipment deductions will no longer pass through to the next owner as previously allowed. Unless the new owner has personally purchased them for their property. Smart investors will now purchase the plant items separately to the property as second hand items from the vendors. Honestly didn’t anyone put any thought into this?

Foreign owners will be slugged $5k per annum if their property is not made available for lease for at least 6 months of the year. To bypass this one all they need to do is advertise their property for lease at market value to avoid this.

The big four banks are pressured to pay a new levy. I’m almost in tears. So instead of increasing taxes, they put a levy on the banks, who will simply pass on the levy to their customers.

The only good property proposal put forward this budget is where downsizers can put up to $300,000 each into their super from the sale of their home, once retired. That’s a game changer and will see many taking advantage of this avenue to downsize and top up their super without affecting their eligibility for the pension in most cases

And the opposition is no better with his plan to abolish negative gearing except on new dwellings in an attempt to make housing more affordable?! so let us get this straight – they want to shift every investor to buy new properties, which is where First Home Buyers receive free stamp duty. So by increasing buyer competition for FHB’s, this will make the property market more affordable? Am we missing something here?

The issues to fix may be complex however it seems this has been a pretty hollow budget without much substance. It will most likely not deliver any miracle cure for housing affordability nor help APRA & ASIC ease their grip on the banks & finance industry