Federal Budget 2017 and Property Market – Real Estate Update

The Budget, First Home Buyer incentives and Bank Interest Rates are hot topics at the moment and the pending effect on the economy, home owners and investors is being speculated by many. The effect from the changes will be calculated within the next few months.

We are finding that many first home buyers and investors are rushing into the property market at present to purchase property in the $500,000 to $800,000 price range to avoid a potential rush of competition which they anticipate to occur with the arrival of the changes and incentives as of 1st July and buyers who may utilise savings to compete and inflate the property market.

We predict there will be an adjustment period and the tax saving and property market incentive changes will provide affordability to different demographics and buyer types in the market to compete and bench mark prices. Property prices between $500,000 to $1,000,000 within the inner city 20km radius will maintain and remain in high demand. Factors such as access to great infrastructure and transport, interstate and international migration demand, population growth, employment and education, small business opportunities and cultural hubs within this 20km radius of Melbourne will help maintain growth and demand in Melbourne.


In this issue:

  • Federal Budget 2017
  • First Home Buyer Grants and Incentives, Victorian Government Announcements
  • Meet the Bionic Agent – Australian Paralympian Michelle Errichiello




A clearance rate of 78 per cent was recorded this week compared to 82 per cent last week and 72 per cent this week last year. There were 672 auctions reported to the REIV, with 525 selling and 147 being passed in, 66 of those on a vendor bid. The REIV collected 96% of auction results last week with a total of 707 results including 22 withdrawn and 13 postponed.
President – REIV
Joseph Walton


Federal Budget 2017

The 2017 Federal Budget boasts several measures designed to increase housing affordability. Here’s a snapshot of the main ones:

First home buyer savings incentives

From 1 July 2017 buyers saving for their first home will be able to voluntarily contribute up to $15,000 per annum and $30,000 in total to their superannuation accounts via concessional contributions which may later be withdrawn to assist with buying their first home.

The contributions and their ‘deemed earnings’ will be able to be withdrawn to be used as a deposit on a property. Although the withdrawals will be taxable, a 30 per cent offset will reduce the tax payable.

GST on new residential property

From 1 July 2018 purchasers of new residential property and new subdivisions will be required to remit the GST arising from such sales directly to the ATO rather than to the developer as is presently the law.

Foreign Resident Property Withholding tax

From 1 July 2017 the withholding tax is set to increase to 12.5 per cent (up from 10 per cent) and the threshold below which no withholding is required decreases to $750,000 (down from $2 million).

Buyers need to be aware that this tax is not only applicable to foreign residents. The onus is on all purchasers, including Australian residents, to determine whether the seller is a foreign resident and pay the withholding tax to the ATO.

Main Residence Exemption removed

The budget has announced the removal of the CGT main residence exemption for foreign and temporary tax residents

These rules are proposed to apply from budget night for new property acquisitions, however, for those who already have a main residence in Australia, the proposed impact does not commence until 30 June 2019.

Ghost Tax

The commonly dubbed “Ghost Tax” is to be charged immediately to foreigners who make a new foreign investment application for Australian residential property. The tax is to apply when a residential property is not occupied or genuinely available on the rental market for at least six months per year.

Travel Expenditure Deductions denied

From 1 July 2017, the Government is proposing to remove tax deductions for travel costs incurred in relation to visiting rental properties.

Rental Property Capital Allowances limited

Depreciation on plant and equipment will now be limited to those assets actually purchased by investors of residential real estate properties. This will remove the ability to continue depreciating existing assets in your newly acquired rental property. Although the Budget papers refer to smaller items such as dishwashers and ceiling fans, this change potentially defers thousands of dollars of deductions on significant items such as lifts, air conditioners, garage doors, and common property in unit blocks until the property is sold.

Downsizing incentives

If you are 65 or over you can make additional non-concessional contributions to your superannuation from the proceeds of the sale of your home from 1 July 2018, however to qualify the following conditions must be met:

  • The property must have been your principal place of residence and owned for at least 10 years;
  • $300,000 of proceeds from the sale of the property may be contributed to superannuation as non-concessional contributions;
  • The concession is available for each person, meaning that couples are able to use this provision to contribute a total of $600,000 to superannuation from the same sale;
  • No work test applies; and
  • No other restrictions or limitations apply to the contributions.


The Treasurer handed down Budget 2017-18 at 7.30pm on Tuesday 9 May 2017.

The Australian Government budget sets out the economic and fiscal outlook for Australia and includes expenditure and revenue estimates for the current financial year, the budget year and three forward financial years. It shows the Government’s social and political priorities and how the Government intends to achieve these.

Download the 2017-18 Budget Overview published 9 May 2017






First Home Buyer Grants and Incentives, Victorian Government Announcements

Consumer Affairs Victoria and State Venue Office have published updates on the First Home Buyer Grants and Incentives, Victorian Government Announcements. These initiatives have to be approved by the Victorian Parliament before they can begin. You should only rely on the exact detail of the changes once the legislation is passed. This is likely to be in June 2017.

Further links to follow and keep updated:

2017 first-home buyer duty exemption or concession

What is it?
This is an exemption from land transfer duty (commonly known as stamp duty) for first-home buyers who buy a home with a dutiable value of $600,000 or less.

First-home buyers buying a home with a dutiable value between $600,001 and $750,000 will be entitled to a concessional rate of duty, calculated on a sliding scale.

In most cases, the dutiable value of a property is the price you pay for it minus any deductions (such as the off-the-plan concession). If the price you pay for the property is less than market value, the dutiable value will be the market value minus any deductions.

Example of proposed first-home buyer duty concession

Dutiable value Normal duty Duty after concession
$605,000 $31,370 $1046
$625,000 $32,570 $5428
$650,000 $34,070 $11,357
$675,000 $35,570 $17,785
$700,000 $37,070 $24,713
$725,000 $38,570 $32,142
$745,000 $39,770 $38,444

The first-home buyer exemption and concession are available for both established and new home purchases.

First Home Owner Directory, State Revenue Office Victoria

2017 first-home buyer duty exemption or concession, State Revenue Office

Planning to buy property, Consumer Affairs Victoria





Meet the Bionic Agent – Australian Paralympian Michelle Errichiello

In 2007, on the 17th day of February, an accident occurred when the then 24 year old soon to be married Michelle Errichiello was on the footpath outside of her workplace, an out of control car came off the road, hitting Michelle and traumatically amputating her right leg.

10 Years on, this is Michelle’s “Thank You Video”

Giving thanks to all of the people in her life who helped support her and give her the strength and motivation to rehabilitate triumphantly and be a part of her journey from learning to run again and competing for Athletics Essendon, to breaking a 100m and 200m World Record in the T42 Female Above-Knee Amputee Sprint, being an Australian Institute of Sport Athletics Scholarship holder and represented Australia as a Paralympian at the 2012 London Paralympic Games, competing in the 100m T42 Sprint Final and finishing 5th in the World.

This is just the beginning…

Michelle Errichiello, Australian Paralympian and Master Advocates Co-Founder has a remarkable level of strength, determination and discipline which she applies to the values, management and customer service of Master Advocates Property Management and Buyers Advocacy.

Feel welcome to contact Michelle and the team at Master Advocates for a complimentary consultation relating to your property portfolio and investment goals.

Michelle’s Errichiello Co-Founder, Accounts and Office Manager, Property Management, Buyers Advocacy, Vendors Advocacy – Master Advocates Real Estate Services:

  • Real Estate Agent’s Representative
  • Real Estate Trust Account Management
  • Property Manager
  • Buyers Advocate
  • Australian Paralympian
  • Motivational/Public Speaker

Mobile: +61 402 053 643




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Supportive information sources: REIV, REBAA, Core Logic RP Data, Federal Government, Consumer Affairs Victoria, State Revenue Office Victoria in association with Master Advocates Real Estate Services published May 2017

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