February 16, 2016
Negative gearing reform is well and truly in the sights of both sides of politics. Why? Two main reasons: 1) by reducing tax deductions the government will retain more cash & 2) investor's insatiable demand for property will decrease, reducing overall demand for property. This could lead to more affordable housing for first home buyers. With the ATO funding roughly half of an investor's losses (depending on their tax bracket) you can see how this investment class will become less attractive with the removal / reduction in negative gearing. At this point there is still a lot of talk - will negative gearing be restricted to new property only? Will the rate of the tax deduction be reduced? Time will tell. At this point it is widely accepted that all EXISTING investment properties/loans will NOT be affected by any rule changes, with changes taking effect from July 2017. So now could be a good time to get into that investment property!