Senators want property tax reforms back on the agenda

Disclosure: Lifestyle Wealth Partners Pty Ltd and its advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. General Advice Warning: Any information on this website is general advice and does not take into account any person's objectives, financial situation or needs. Please consider your own circumstances and consider whether the advice is right for you before making a decision. Always obtain a Product Disclosure Statement (If applicable) to understand the full implications and risks relating to the product and consider the Statement before making any decision about whether to acquire the financial product.

Tweaking property investor taxes could save the federal budget billions and boost home ownership, even with exemptions for those operating under the old rules, analysis commissioned by two senators suggests.

Independent senators David Pocock and Jacqui Lambie want changes to capital gains tax and negative gearing back on the agenda, commissioning an analysis on the topic before the May budget.

The issue is politically fraught, with Labor contesting two elections promising to scrap negative gearing on properties purchased after a certain date but then abandoning the policy in 2019.

The modelling by the Parliamentary Budget Office suggests modest changes could save the federal budget $16 billion in a decade, which the crossbenchers say could be used to build more social and affordable homes.

Different options were modelled and the senators are pushing for the lightest touch of the five in which the capital gains tax discount is grandfathered for existing rentals and halved for newly built homes.

Landlords would also still be able negatively gear their first property.

Senator Lambie said grandfathering the changes, which would allow those with investments under the current rules to keep those benefits, was about honouring existing agreements.

“I don’t feel comfortable with breaking that agreement that was done with them initially,” she told reporters in Canberra on Tuesday.

Senator Lambie said the Prime Minister Anthony Albanese needed to show courage and act on the changes, rejecting the suggestion Labor’s negative gearing reforms lost them the 2019 federal election.

“That’s absolute rubbish, I can tell you now running around during that period of time trying to win my own seat back, I heard nothing about that negative gearing in Tasmania, nothing at all,” she told ABC radio on Tuesday.

“Show some courage, because that’s where your votes come from.”

Treasurer Jim Chalmers confirmed on Monday there would be no changes to negative gearing in the May 14 budget.

Yet with rents soaring and home prices rising even as interest rates remain elevated, the state of the housing market remains a focus for all levels of government.

The behavioural modelling by the budget office released on Tuesday suggests changing investor tax settings would help more Australians into their first home.

Investors would start putting their money into other assets, such as shares, leading to fewer available rental properties but also less buyers competing for homes, giving first-time buyers a better chance.

Senator Pocock also said keeping preferable tax treatment for new builds would also help incentivise supply.

“This is a sensible way forward that is going to start to turn this ship around,” he told reporters on Tuesday.

“We’re in a situation where unless you have the bank of mum and dad, it’s basically impossible for young people to buy property. That’s not good for us.”

 

Poppy Johnston
(Australian Associated Press)

0

Like This