In recent months there has been a lot of talk about proposed changes to negative gearing; in particular, the shifting of provisions from established residential purchases to new builds and an increase in capital gains tax.
The Real Estate Institute of Australia (REIA) have released information that outlines how property owners may be affected by proposed changes.
According to REIA, if negative gearing is abolished on all but newly built dwellings, property investors:
- Will no longer be able to buy strategic investments, looking to acquire high-value properties in prime locations that will realise the best gains over time.
- Will no longer be able to write rental losses off against other tax, creating a disincentive to invest in property at all.
- Will find it harder to sell their investments if and when they want to dispose of them, as there will be no incentive for other investors to buy.
- Will find their investments worth less, as the lack of incentive for other investors to buy them will translate directly to reduced capital growth.
With the federal election just under a month away we urge all owners to learn more about this policy and how it will affect your investment.