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.
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’.
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