Tax Changes - Negative Gearing and CGT next?

Hi All

I think negative gearing and CGT could be the next change. Why? See below...

https://www.thechronicle.com.au/new...e/news-story/4df054c94a432b4fcf88c03897983b22

People on here are adamant it won't happen but it think it will. I maybe a soft change which affect people with say more than 1 property...but it will happen. Labor is pushing ahead to make the structural tax changes which the Libs would not do.

Thoughts?

 

While we benefit from the current rules, they aren't exactly equitable, so NG and CGT changes might actually be reasonable (depending on their nature).

For my back-pocket it would be better to vote "Liberal", for my social justice conscience, it would not be.

 

They're equitable in the sense anyone can do it.

Anyway, I view the NG debate as a great distraction from what is needed to bring prices down - new supply

 

If people think that there is a rental crisis now wait till the government change negative gearing!

 

That is why I reckon they will start small....people with more than 1-2 properties....as time goes by it will change again.

I reckon ....we will see vacancies go back up soon as they have really cracked down on immigration...it will start showing from 2025....

 

100% agree on the two replies above

 

i think you're misinterpreting people's posts. people aren't adamant it won't happen, people are adamant that they should vote the labor out at the next election so it doesn't happen.

 

People voting purely for self interest is the reason we have the problems that we do have!

 

Not if they sugar coated with another tax cut.....labor is masters of public perception....watch this space.

I am not hanging around to find out.....

 

When the ALP (Albo) backed off Shortens ill fated 2018/19 policy plan the in the 2023 election albo committed to "until the next election"" on the policy meaning that next to occur. With interest rates 3 times their prior lows the cost to the budget has ballooned for both property and shares. I dont think neg gear itself will be cut. It will remain a tax feature BUT be very hard to attain. I believe they will phase out interest as a deduction. Like other countries eg Canada, UK and NZ. Is that a lie ? Probably but technically not. If you had major repairs or hefty land tax its possible to still neg gear. No lie ? Investors count for 1:3 but 2:3 may like that. especially if Treaury sell it with tax cuts or enhanced spending on Medicare and health etc The data from NZ, Canada and UK indicate the markets didnt collpase but the budget did well from it and it did encourage housing supply without mproperty valuescrashing. NZ it fell a bit (20%) in some areas.

The CGT discount of 50% is also a weak spot. That said I believe the main residence CGT exemption should have a cap (per property or lifetime ?) . However if it were introduced it could limit the availability of new housing as sellers may hold property. BUT the lower value property / homes could bypass this in fairness. Apply it to homes that exceed $3m as an example (same as super of $3m is considered high wealth). Impose a scale back or no discount above proceeds of $3m as a example.

 

Are you trying to formulate labor policy? Don't give them ideas!

 

i think not having politicians in govt, that can stand there on Monday, and lie to everyone with a straight face saying that they won't do something, and then by Thursday turn around and say that they will do it because 'things have changed', is in everyone's interest.

 

CGT should be just indexed, not flat 50%. that is fair.
NG should go. its basically a crappy policy really. if you ****** investor, buying OTP and "negatively gear", u will loose money either way. so without NG, maybe one will stop buying OTP. Those that are playing in them multimillion $$$ space and NG, dont need it, they rich anyway.
In a normal case, if you buy well, your property won't be that much in the red after 1-2 years. and that should be the goal.
I doubt they would cancell the actual interest/expenses deductions as those directly related to costs of producing the income.

I reckon though they would grandfather or whatever its called.

 

Where do you think is safest haven Paul? Trusts seem to keep getting mentioned as well, seems like only a matter of time the rules will be tightened up there. Superannuation keeps getting tweaked, you can see the polies salivating at the thought of sinking their teeth into that potential cash pile.

Company structure seems to still be a good option? There is a recognition that corporate tax rate needs to stay competitive, along with other incentives especially for Small Business etc.

 

The problem with giving leeway of 1-2 means that most people wouldn’t be captured and hence defeats the purpose of them doing. I think allowing carrier over losses to future property income/gains would be the way to go

 

The cheek of Labor - hit the rich with a tax increase, then complain that they're trying to reduce their tax, so then justify taxing them again further.

 

Need only look across the Tasman for inspiration from thier labor government:

Option 1: Ring fencing the losses (Changes to ring-fencing rental losses rules)

Option 2: Allow NG without deductions for depreciation and/or interest expenses. Both of these are/were in effect I believe.

Option 1 is actually fairly reasonable imo.

 

Removing NG is laughable, 30% of the housing market x 50% are the amount of people using NG.

So what's next?
People who get upset will sell and displace the tenants in an already tight rental market.

I love it how the govt, well I should say Greens blame investors for the housing woes, it's so bad that it's laughable. So how are they going to stop the 70% PPOR selling for more than they bought?

 

There was research recently that investment property ownership is concentrated in a small group of investors.

A quarter of Australia’s property investments held by 1% of taxpayers, data reveals | Australia news | The Guardian

(The wording of the article isn't clear, so I'm not sure if it's 1% of investors have quarter of all properties, or 7% do.)

If the government wanted to cut back on negative gearing's costs, they could limit it to one property. That'd probably result in a media uproar about how they were hurting mom and pop investors.

I suspect that a lot of the tax concessions will be wound back in future, as they're a growing cost to the budget.

 

I reckon they could tweak NG deduction by applying the inverse of the income tax thresholds.

Ie. 100% up to $18,200
84% of the next bracket etc..

In that way they taper off deductibles in incremental manner which would have a bigger impact on larger portfolios & less on the mum & dad investors closer to the voter base. This would increase revenue.