Home Agents & Agencies Australia’s biggest tax break is now the family home

Australia’s biggest tax break is now the family home


Written by Stefan Kostarelis

Good news recently for homeowners or those currently in the process of buying a home.

New figures released on January 30 by the Treasury reveal that the family home has just eclipsed superannuation to become Australia’s biggest tax break.

As reported in The Sydney Morning Herald, the figures show that the capital gains tax exemption on family homes cost the budget a record $61.5 billion in 2016-17, well above the $33 billion lost to superannuation tax concessions.

The Treasury’s annual Tax Expenditures Statement as a part of the Charter of Budget Honesty, which was updated during the 2016 election.

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In the 160-page document, 25 tax breaks were identified, costing a total of $145 billion.

The $61.5 billion in tax breaks for family homes is made up of the $27.5 billion in “Main residence exemption” and $34 billion in “Main residence exemption – discount component”.

Tax breaks on the family home cost the budget more than the Pharmaceutical Benefit Scheme (around $10 billion) and the age pension combined (around $45 billion).

The Treasury’s annual Tax Expenditures Statement was quietly released on Monday without any major announcement.

Agents should consider including figures on recent capital gains in popular suburbs they are selling properties in as buyers will undoubtedly begin to consider buying a home as more of an investment than previously.

Whilst agents cannot give financial advice as per the Form R7 Warning Notice, they should have a basic understanding of tax implications that comes with property, enough that they can refer to an accountant or financial advisor confidently.

Karen Conlon of SumTotal Accounting & Business says;

“The implications of purchasing property can sometimes be extremely complex, especially for individuals with multiple properties.

“It’s important to seek the advice of an expert in this field, and agents should be confident in referring a client with large portfolios including assets such as property to an expert who is experienced in this field.”

SumTotal Accounting & Business provide a complete service of help and advice in areas such as capital gains tax, preparation of income tax returns for individuals, partnerships, trusts, companies and superannuation funds.

As experts in property tax, self managed super fund investing and management of ATO audits and disputes, she says:

“Self managed super fund investing or purchasing is especially tricky, requiring no less than an experts advice as there are more complicating factors than tax issues.”

She says agents are welcome to call her anytime if they would like further advice, and she welcomes enquries regarding a client’s particular situation, saying;

“Being backed by an expert in tax law helps build trust with clients, vendors and buyers alike, especially when you can make a referral with full confidence that the client is being looked after by a professional.”

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