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Dear <<First Name>>,

Negative Gearing Changes That Can Affect You

Over the past few months most of our clients would have read or heard about negative gearing in the media. As the Federal Election looms, there has been heated discussion both in favour and against current negative gearing policy.

Each of the parties have outlined their negative gearing policy as follows:

  • Labor plan to restrict negative gearing concessions from July 2017. Negative gearing will only be available for newly constructed properties and will no longer be available on any existing properties purchased. Capital Gains Tax (CGT) exemptions will also be changed Currently, if an individual holds an income producing property (ie. any rental property) for more than twelve months, they receive a 50% discount on CGT when they sell; the change proposed will mean that investors will only be able to claim a 25% discount on CGT from July 2017. An incoming Labor Government will be in a position to enact their policy, as they are very likely to have the support of the Greens in the Senate.
  • The Greens plan to get rid of negative gearing tax concessions altogether. They also plan to reduce CGT discounts by 10% each year from the 1 July 2016. From July 2020, there will be no CGT discount at all. The Greens are likely to seek support for their more restrictive policy from an incoming Labor Government as part of negotiations in the Senate.
  • The Coalition has advised they will not be making any changes to current negative gearing concessions or to CGT exemptions. Negative gearing and CGT exemptions will remain in its current form under a returned Liberal/National Government.

There is alot of conjecture about what would be the effect on property prices if a Labor/Greens government is elected. Some economists predict that property prices will fall and that the only discussion around this is "by how much", as property investors desert the marketplace. Commentators vary on their predictions from a decline of 2% (Grattan Institute) to a decline of 30% (Bill Moss). Any price decline would, of course, vary by geographical area and would be largely determined by demand/supply.

The further unaccounted for effect of departure of investors from the market would be increased demand for state housing. The budgetary costs for state housing would inevitably lead to an increase in taxation at either state or federal level or both.

The purpose of this newsletter is to inform all of our clients who are affected under such changes and to be aware of what these changes will mean for you.

For further information, please click on each link below from negativegearingaffectsyou.com for more detail.

First Home Buyers Renters Investors Everybody

If you have any questions, please feel free to contact our Client Services team on (08) 9227 6300 or email us at clientservices@austasiagroup.com.

With Compliments,

Simon Chesson
Director

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