Triguboff on the Budget: Brand-New Apartment Investors are the Winners

Harry Triguboff, Meriton boss and property billionaire, believes changes to capital gains tax and negative gearing in the latest federal budget will create fresh opportunities for investors of brand-new apartments.

Federal Treasurer Jim Chalmers delivered his fifth Federal Budget this week, initially sparking concerns about potential changes to capital gains tax and negative gearing – despite earlier election assurances.

Mr Triguboff believes the outcome has ultimately strengthened the appeal of new apartment purchases for investors, which is vital in providing much-needed rental stock in a very tight rental market where rents continue to increase.

“Brand-new apartment investors are clearly among the biggest winners from this year’s budget,” Mr Triguboff said.

“And Meriton is uniquely positioned to meet demand, with more brand-new stock available than any other developer in the country.

“We guarantee a tenant for every investor, we manage the property and even lend finance at Australia’s lowest interest rate, ensuring our investors are looked after every step of the way.

“This week’s changes can only boost investor confidence, which has been subdued for some time. From my experience, I believe many more investors will now enter the market because it simply makes sense. Rents have never been stronger, and vacancies are constantly below 1 per cent.

Under the proposed tax changes, purchasers of brand-new apartments can continue operating under the existing capital gains tax framework – where only 50 per cent of the capital gain is taxed if the asset is held for more than 12 months – or elect to use the new inflation-adjusted indexation model introduced by the government.

Importantly, investors of brand-new property will still be able to take full advantage of negative gearing benefits. Mr Triguboff says this tax benefit is a major positive for the brand-new market.

“Attractive tax incentives through negative gearing remain in place, while buyers now also have the flexibility to choose the taxation structure that works best for them when they decide to sell, potentially saving tens of thousands of dollars over time.” Mr Triguboff said.

“Many buyers had adopted a “wait-and-see” approach leading into the budget due to uncertainty around possible changes. However, within 24 hours, we’ve seen buyers who were previously sitting on the fence reconnect with our sales team and give the green light to proceed with purchases.

“Some commentators have described the changes as confusing, but if you are buying a brand-new property, very little has changed – except now buyers have greater flexibility.

“The way we see it is simple.

“Despite the recent changes, we are still facing a severe housing supply shortage. Dwelling approvals and completions are falling, and this will ultimately lead to rents rising further, driving property prices higher.

“Our sales team understands the changes and is happy to help explain how the new tax arrangements can benefit buyers.

“We believe many Australians will discover they are actually better off than they first thought,” he said.