Housing market

This Labor Proposal Could Sink the Property Market

Negative gearing, in a nutshell, is a policy that allows investors to deduct losses on their properties from their tax bills. Meaning, if your interest and expense payments exceed your rental income, you pay less income tax.

This has been a huge boon to many property investors, who were able to reduce their tax bills even as the values of their investment properties skyrocketed.

It has also served to prop up Australia’s increasingly shaky property market. But if Labor wins the 2019 election, that’s set to change.

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 Labor’s property tax plans

The AAP reports that the Labor Party hasn’t decided when it would amend the negative gearing tax break.

But Labor is committed to keeping negative gearing only for newly constructed homes.

The coalition opposes their policy. And, not surprisingly, so do most developers and real estate players.

Nonetheless, according to the AAP, Bill Shorten says the reforms will come ‘before our first budget or at our first budget’. However, Labor is still deciding on the ‘final timing’.

PS: Tired of seeing your wages, investments and interest gains all sapped by tax? Had enough of job-creating companies being driven overseas by Australia’s heavy tax burden? Then you should read our free new research report, ‘What you could do to stop Australia’s Tax Freedom Day from blowing out even further in 2018’. You can download that report free, here.

Bernd Struben

Bernd Struben

Bernd Struben is the lead editor at The Australian Tribune. Bernd makes use of his extensive network to bring you the top stories you need to know about each day. Stories the mainstream may miss. Or bury somewhere you’re unlikely to ever read them. Bernd studied aerospace engineering and journalism at the University of Michigan, before graduating with a degree in economics. Over the past two decades he’s worked in media, management, and finance in the US, the Caribbean, Europe, and Australia. His other role, as the editor of the Port Phillip Insider, puts him in a unique position to read Australia’s most exclusive financial advice. Some of which he shares with readers of The Australian Tribune for free.
Comments: 2

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  1. Of course that people who have wrested interest in negative gearing, will cry “wolf”, it is their investment that is all that matters. It is only natural that people put their interest first, everything else comes, ah well as it may. It is ironious that a struggling young family, through its taxes help the investor to buy their third house, while they can’t afford a family home, because the investors drive the cost out of their reach. Look what they have done to our cities, yelling how we need more and more dwellings, and then for good measure call for more immigrants. Does an investor care anything other than keep making profit into perpetuity.

    I certainly am no Labor fan, but it is inevitable that we will get it next year, and I would like to see how this would play out. Speculation is not an investment, and if one wants to do it, let him/her do it with their own money. A Stamped always becomes a bubble and a lot of people get hurt when it pops.
    JL

  2. What Joe said…
    And also, Aust. has the best subsidised real estate investment tax break system in the world… What a joke.
    They keep saying neg. gearing helps mostly mum and dad investors. This may be true to a small degree, but these mum and dad investors are mostly high double income earners to begin with.
    The bubble is already bursting now, and I’ afraid to say it needs to fully burst.