With the upcoming election looming, there's a huge tax impact that I haven't seen covered in the media all too much.
Both the Labor Party & Greens are planning to make changes to the existing negative gearing tax concessions.
Not only will this impact your tax returns, but you can be sure that it will have a huge impact on property prices as well.
Many households rely on negative gearing each year to help minimise the impact of mortgage payments on their post-tax income as well as their day to day living.
Changes to the existing negative gearing concessions could result in many houses being repossessed by the banks and of course, with less demand, prices will fall.
In summary...
Labor Party
Labor plan to restrict negative gearing tax concessions from July 2017.
- Negative gearing will no longer be available on any second hand properties purchased.
- Capital Gains Tax (CGT) exemptions will also be changed under Labor. Investors will only be able to claim a 25 per cent CGT discount from July 2017.
An incoming Labor Government will be in a position to enact their policy as they are very likely to have the support of the Greens in the Senate.
Greens
The Greens plan to get rid of negative gearing tax concessions altogether.
- They also plan to reduce CGT discounts by 10 per cent each year from the 1st of July 2016. From the 1st of July 2020 there will be no CGT discount at all.
Liberal Party
The Coalition has advised they will not be making any changes to current negative gearing concessions or to CGT exemptions. Negative gearing and CGT exemptions will remain in its current form under a returned Liberal/National Government.
If you wish to discuss any of the above further and the impact it can make on your own personal investments, please do not hesitate to contact us.