Government Housing Policy Changes March 2021

The Government’s housing policy announcements on March 23rd included some significant tax changes.

• Double the bright-line test from five to ten years for residential investment property acquired on or after 27 March 2021.

• No interest deductions for residential rental property acquired on or after 27 March 2021 and for already acquired properties a phase out of interest deductions over four years.

• The bright-line period extension is not intended to apply to “new builds” (with consultation on how this should be defined to come). The Government will also consult on whether the proposed interest deduction restrictions should apply to new rental builds.

On the housing supply side, a $3.8 billion Housing Acceleration Fund has been established to boost the pace and scale of houses being built. Of particular focus are affordable homes that low to moderate income households can afford and in locations where high housing need has been identified.

The Government has also raised the caps to be eligible for first home grants and first home loans to enable more first home buyers to buy homes.

The income cap for a single buyer will be raised to $95,000, and for two or more buyers to $150,000.

To view the new house price caps for your region, click here.