What if Green Labor kills CGT exemption and Neg Gearing?

Crystal Balls please.
What will happen to property prices, rental rates & demand etc if Greens force Labor to QUICKLY adopt their desire to kill CGT exemptions and Neg Gearing, plus cap rent rises?
Will it be like when Paul Keating tried it?
I think that the Greens housing policy is why they got so many votes (sorry to disappoint those wanting to save the planet) - pent up frustration from first home buyers and renters at lack of affordable housing.
But will such a policy help things - or make it worse?

 

I am scared exactly this will happen. But if Labor gets its number and more on its own , then things may be different. But again, Labor may inclined to adopt some of these policies from greens, by the success they brought to greens, to survive in future elections.

 

Sell and avoid the stress.

 

As of now labour is headed to win 76 seats majority so none of that will eventuate!

https://www.theaustralian.com.au/na...ive-coverage/f30f9d527a256948c8510359fadad000

"Anthony Albanese remains on track for majority government in latest counting, with current Labor leads showing it could hold at least 76 seats in the 151 member House of Representatives.

The latest counting has Labor on 76 seats, the Coalition on 54 seats with a crossbench of 16 including six new teal MPs.

The Greens are on track for as many as four seats, according to the latest figures."

 

Greens performed very well in areas recently affected by flooding and another summer of extremes. While I think some voted for Greens on housing, most are trying to get a government who might try and reverse a century of pumping crap into the air

 

As long as they grandfather it I don't mind. If not, there'll be anarchy.

 

they have no mandate to do that

No government can control the weather. Government doesn't pump crap into the air, its consumers and businesses. Having said that, CO2 is not "crap", if thats what you were referring to

 

If they did they will get thrown out next election.

 

Never said they did? But they can enact the change we need to pollute less, via regulations, penalties, carbon taxes, etc.

Haha, ok mate. I'm curious to know how many more summers of extremes you need before you change your mind on this one - not that your opinion makes one iota of difference to the repeated flooding we're copping here on the east coast.

 

CO2 by itself isn't pollution - you breathe out CO2. Excessive CO2 can cause a warming effect i suppose.

We will see how much "extreme" weather we get now we got labour/greens/teals elected - seeing that you think government policy makes more than one iota of difference

FYI the deadliest flood occurred in 1852. The most economic catastrophic flood occurred in 2010/11. The floods in 1842 had the highest water levels ever in brisbane, over 8m.

There is an extreme amount of confirmation bias going on - where every weather event is now blamed on CO2. Im actually surprised that noone has suggested the earthquakes last year were due to climate change

 

Businesses and consumers did not make the decision to remove lead from paint and reduce it in petrol.[1]
Businesses and consumers did not make the decision to ban CFCs.[2]

Businesses and consumers will be dragged kicking and screaming to make a significant difference to climate change.


[1]
[2] did you know the Australian government at the time was considering a plebiscite on banning CFCs, but in the end it was determined to be too important, and the politicians actually did their job

 

Proposed laws can never be predicted. All laws can be changed with willpower and the strength of both houses of Parliament and.... other parties.

When laws are changed sometimes matters are grandfathered to stop past impacts on present asset owners. The retention of pre-CGT assets is a good example. Other times the Government legislates to phase out old law and bring in new law over time. Examples at present occur in NZ and UK with pased out interest deduction for rental property. In other times the change is swift and brutal.

The ALP took a revised CGT policy to the election and it very doubtful in the initial term that Albanese & Co would change party policy and be accused of lying to the parliament and electorate. But lets see what the first two budgets bring. They promised to retain tax cuts. So tax reductions are unlikely. They said no change to tax rates...So new taxes and changed approaches may be their way to not lie. Killing interest deductions over 3 years doesnt end neg gearing...Its just makes it really really that much harder. That would enhance the neg gearing benefits so why not trim the discount too ?

Labor axes changes to negative gearing, capital gains tax
They also had a new policy to not stop negative gearing
Labor dumps negative gearing, backs tax cuts

That said blind freddy can see a budget that needs repair and aftre they open the books its remains to be seen what future policy will be if the budget needs to adapt to covid and climate change etc. I believe these policies will change in time. Changing Government means new heads and new ways. The ALP must appease the teals and other minorities like the greens etc. They arent exactly fans of taxpayers funding neg gearing while climate policy is argued to be too costly to address.

Ending broad tax deductions through a standard deduction could also be introduced and not breach promises.

 

The extremes were much worse more than 70 years ago Some states had their worst flooding in 1956 the Murray River hasnt come with in cooee of those levels Many areas flooding hasnt been worse than the 1974 floods. The worst fires were in 1939. The worst droughts were pre 1950.. Top 10 worst floods in Australia - Australian Geographic

 

It would be crazy for any government to discourage rental properties. Most, if not all of my tenants rent because they don’t want to own.

 

Maybe not as they would only target a class of people who have benefited from several market cycle's..
What would happen IF the new government started taxing the sale of the PPOR that would give them medium-term survival advantages.

 

I think the impact of canceling of the cgt discount and neg gearing could be debated all day long. Could see a decent price impact which would see a lot of ‘value’ destroyed, and developers would lose money on their inventory, land holdings etc. but eventually I’d expect the market reaches a new equilibrium at a lower price level, and then continues to function fairly well.

Rental yields would be higher to offset the lost income for landlords that the tax adjustments would cause, but this could come through either price falls or rent increases, or both.

After a painful adjustment phase, I think things would be ok. I’ve heard developers jump up and down about this saying that if prices fell x% it would be uneconomic to develop, but that’s really just cause the land price of the inventory they are carrying is too high. Land prices would adjust, and development of new supply would eventually become economic again.

in saying all that, capping rents would be an absolutely terrible idea and would eventually lead to higher costs for tenants, exactly the group they wish to protect. This could come through things like key money or non-refundable deposits, or simply the inability to find a place to stay cause of a shortage of stock.

I guess what I’m saying is economically, removing the cgt discount or neg gearing, and capping rents, are two very very different things. One is removing a market support mechanism, which the market mechanism will adjust for. The other is fixing prices, so removing the ability for the market mechanism to function properly. Fixing prices are always a terrible idea.

I want to say capping rents won’t happen, but I am seeing it more and more offshore. Germany tried it, US talking about it seriously in some states. Can never rule it out, not rely on the ‘economic wisdom’ of the cross bench.

 

What would happens if negative gearing was stopped?
No tax deductions for investment properties?
Or deductions amount can't exceed income amount?

 

Removing the cgt discount may discourage selling

 

it’s almost at that point now

 

I have some distant memory of a Vietnamese bureaucrat saying in the 00s that price ceilings on rents had done what the Americans could never do: destroy their existing liveable housing stock.

Interested to hear what you think would happen to the development of land and housing estates in the regions where land is already very very cheap. I'm guessing there would be little change to the equilibrium? Smaller lots? Smaller house?