There has been a lot of talk about negative gearing over previous months as we approach election time. We thought worthwhile to clarify the potential changes along with how, or if they would affect Property Investors.
The Liberal party have clarified in their recently released Budget that they are not going to make any changes to negative gearing. However, as you may be aware, the Labor party does have specific plans for negative gearing legislation should they succeed in the next election…
- Labor will reform negative gearing and the capital gains tax discount to ensure that our tax system is fair, sustainable and targets jobs and growth.
- Labor will limit negative gearing to new housing from 1 July 2017. All investments made before this date will not be affected by this change and will be fully grandfathered.
- Labors reforms will mean that taxpayers will continue to be able to deduct net rental losses against their wage income, providing the losses come from newly constructed housing.
- From 1 July 2017 losses from new investments in shares and existing properties can still be used to offset investment income tax liabilities. These losses can also continue to be carried forward to offset the final capital gain on the investment.
(Taken directly from: http://www.alp.org.au/negativegearing)
What does this mean to the Property Investor ?
Firstly, it is important to state that the tax implications of any investment property that you currently own will not be effected regardless of who wins the next election, as the changes are “fully grandfathered”.
Moving forward, we are very confident that our long term strategy of Tax Effective Investing in particular is served by the current legislation and will only be enhanced by the proposed changes.
This high cash flow strategy ensures affordability of the investment which is the key to seeing out the cycles of property growth as well as enabling diversification to create a cash rich and secure retirement asset.Back