The Federal Budget for the next year has been dominating headlines, with everybody from political pundits tofirst home buyers making their opinions heard on this massive driver of the future of Australia.
However, while the budget has certainly been a diverse document covering all manner of factors from tax to infrastructure, there appears to have been one thing missing from the documentation: Can you guess what it is?
Do you know how the Federal budget is going to affect your mortgage?
The Ghost of Gearing Past
A little while ago, there was a great ruckus kicked up about the state of negative gearing for investors. Negative gearing, for those who are unaware, is the state in which a property investment ends up costing more in mortgage repayments than you receive from rents. Why would anyone do this, you may ask. Negative gearing affords investors the opportunity to write off these losses when it comes to tax time, enabling people to take full advantage of the low interest rates with a far lower level of risk to their finances.
While the Treasurer Scott Morrison explicitly said that negative gearing would not be touched in the new federal budget, there was still some uncertainty as to whether an alternative would be offered instead. After all, housing affordability has been a hot button topic for every political party lately. However, the new budget has not made mention of negative gearing, capital gains or any kind of adjustments to tax in investment housing at all.
An indirect effect
You may find that you are in a far lower tax bracket.
However, it appears that the budget may be affecting how much you can afford to spend on real estate on a more oblique angle. There has been an increase to the threshold at which people pay the 32.5 per cent income tax rate. Rather than those earning about $80,000 paying this proportion, it has shifted to $87,000. You may find that you are in a far lower tax bracket as a result, allowing you to sink that capital into your savings or paying off your home loan sooner.
The budget is an overarching process, affecting nearly every aspect of Australian industry. If you want to make sure you are making the most of your investment capital, make sure you get the right loan with the mortgage broking experts at Smartline. To us, your budget is just as important as the federal one!
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.