2024 Federal Budget Update for Property Investors and Business Owners

Overview

The 2024 Federal Budget presents several key initiatives relevant to property investors and business owners. With a focus on immediate deductions, energy-efficient upgrades, and housing investments, the budget aims to provide both tax savings and support for sustainable growth. This update highlights the major impacts of the budget on our audience, particularly those interested in tax depreciation.

Immediate Deductions Extended

The government has extended the immediate deduction for assets costing less than $20,000, providing significant tax relief for small businesses. This extension applies until 30 June 2025. Previously, this deduction was set to expire in 2023. This initiative allows property investors and business owners to immediately write off the cost of eligible assets, improving cash flow and reducing taxable income.

Eligibility Criteria for Immediate Deductions:

1. Turnover Threshold:
   • • To qualify, a business must have an aggregated turnover of less than $10 million, including the turnover of any connected entities and affiliates.
2. Asset Cost:
   • • The asset must cost less than $20,000 (excluding GST). This threshold applies to the individual cost of each asset.
3. Timing:
   • • The asset must be acquired and first used or installed, ready for use, between the start of the relevant period and 30 June 2025.
4. Asset Types:
   • • The immediate deduction applies to most depreciating assets, including new and second-hand assets. However, some assets may be excluded if they are set aside for private use.
5. Business Use:
   • • The asset must be used primarily for business purposes. If an asset is used for both business and private purposes, only the business portion of the cost can be claimed.

Energy-Efficient Upgrades

Starting on October 1, 2024, new tax incentives will be available for energy-efficient upgrades to commercial properties. These upgrades can qualify for immediate write-offs, encouraging sustainable practices and potentially increasing property value. Eligible properties include commercial investment properties, with specific details on values to be outlined in upcoming guidelines.

Housing Investment and Affordability

The budget allocates $6.2 billion to address housing shortages and improve affordability. This includes:

• An additional $1 billion to states and territories for new housing developments.
• $1.9 billion to increase Commonwealth Rent Assistance by a further 10%, benefiting nearly 1 million households.
• $1.9 billion in concessional finance for social and affordable homes.

 

 

These measures are designed to boost housing supply and support renters, but they also aim to create more opportunities for property investors by increasing the availability of affordable housing.

Impact on the Housing Crisis

The budget’s investment in housing is a critical step towards alleviating the current housing crisis. By increasing the supply of social and affordable homes, it addresses both short-term rental stress and long-term housing availability. However, the effectiveness of these measures will depend on their timely implementation and the actual increase in housing stock.

Supply of Investment Properties

The budget’s focus on housing development and infrastructure investment is likely to stimulate the supply of investment properties. This, combined with the extended immediate deductions and incentives for energy-efficient upgrades, makes it an opportune time for investors to expand their portfolios.

Tax Depreciation Relevance

As specialists in tax depreciation, Koste Chartered Quantity Surveyors can help property investors maximise their tax benefits under the new budget. The extended immediate deductions and incentives for energy-efficient upgrades directly impact the depreciation schedules, potentially leading to significant tax savings.

Conclusion

The 2024 Federal Budget offers various opportunities for property investors and business owners to save on taxes while promoting sustainable growth. By taking advantage of immediate deductions, investing in energy-efficient upgrades, and leveraging the increased housing investment, investors can enhance their portfolios and contribute to a more sustainable future.

For detailed insights and personalised advice on how these changes affect your investments, contact Koste Chartered Quantity Surveyors.

For further information and to review the complete budget overview, please refer to the attached document, 2024 Federal Budget Overview.

By staying informed and proactive, property investors and business owners can navigate the changes and make the most of the opportunities presented by the 2024 Federal Budget.

 

Mark Kilroy
Chartered Quantity Surveyor, RICS & AIQS
Director, Koste Chartered Quantity Surveyors