New laws hit high market
ATO ups clearance money
NEW property investment laws have come into place as of July 1.
Ray White Whitsunday principal Mark Beale said while the new foreign investment laws would only affect between 5–10% of the Whitsunday property market, it was still something buyers and sellers need to be aware.
Previously, any house sold for more than $2 million needed to have 10% of its purchase price temporarily placed in a trust account and sent to the Australian Taxation Office until the buyer received a clearance.
“They’ve reduced it to $750,000 and 12.5% of the purchase price, which has changed it dramatically,” Mr Beale said.
“Effectively it makes agents and solicitors agents for the tax office and it creates extra paper work and costs if you’re a buyer or seller.
“Every minute your solicitor works on something they’re charging you for it, so it’s going to be costing people more money in the end.”
Mr Beale said that with a median home market price of $440,000, the new laws would not affect the Whitsunday market as much as other places but it would still be something that needed consideration.
“The story six to 12 months ago in Sydney, in particular at the harbour front, was overseas investors buying properties the same as Australian residents or citizens but they weren’t allowed to and it caused problems,” he said.
“The government needs to know how many foreigners are buying Australian properties.
“(For example) in the 1980s on the Gold Coast, a lot of Japanese buyers came in and bought virtually the whole main street.”
Mr Beale said people would need to be more prepared by acquiring a clearance certificate from the ATO that says they’re an Australian citizen to retrieve the money from the tax office. The withheld money will be returned once the person is cleared.
“If they’re a foreigner, they have to apply for a visa under the Foreign Investment Review Board,” he said.
“It probably won’t have that much of an impact locally but people do need to be aware they need that clearance certificate before they go to market.
“I think the tax office is probably going to be inundated.
In Sydney almost every property is over $750,000 within a certain area.”
Mr Beale said with the new process they were unsure how long people’s money would be withheld.
CHANGES: Under new tax laws about $2.125 million of the $17 million price tag for Airlie Beach’s Mandalay House would have to go to the ATO temporarily.