Deciphering proposed policies, we have taken the time to summarise some of the key aspects that may change the property market if the Australian Labor Party (ALP) takes over leadership.
To assist in achieving their forecast of $32Bn in savings over the next 10 years they are proposing:
PROPERTY INVESTMENT POINTS
• Eliminate negative gearing to all residential investment properties other than new housing from the 1st of July 2017.
• Stop investors from claiming losses on secondhand properties against their wage income after that date.
• All investment properties purchased prior to this date will be ‘grandfathered’ (meaning any current tax arrangement with your investment property will remain).
• Reduce the capital gains discount on all investment properties from 50% to 25%. •
• Will investors want to hold on to secondhand properties instead of selling to retain their negative gearing status?
• Could this inflate investment prices on secondhand properties due to a fall in supply and demand?
• To obtain negative gearing benefits on new properties will investors want to buy properties in new start-up and more remote land development areas?
• How will it affect the investment renovators who thrive on purchasing secondhand properties and making them look like new?
• Will investors buy property differently through developer and marketing companies who often do not have the same regulations on property transactions as the traditional real estate agency?
• The latest data from the ATO shows that in the year 2012/13 property investors ‘negatively geared’ or reduced their taxable income by approx. $5.5Bn. That’s $5.5Bn that the Government could have taxed (not necessarily collected).