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What effects could the federal election have on property?

If all of the polls are right and Labor is elected in 2019, the Labour government proposes to:

  1. abolish the blanket negative gearing tax offset allowance for residential property investors, with the exception of newly built homes; and
  2. reduce the capital gains tax discount for all assets that are held longer than 12 months from 50 per cent to 25 per cent.

Both measures are proposed to be grandfathered, which means they won’t apply retrospectively.

There is no doubt that the above measures will change the property investment landscape in Australia. Some economists speculate that investors will be turned off property investment and as a result, renters will be impacted by a shortage in supply. Others argue that the proposals will level the playing field between investors and owner-occupiers.

The extent of the effect of Labor’s proposed changes remains yet to be seen and like any of these proposals, the devil is always in the detail. It is however important for investors to be prepared for major changes to property investing in Australia.

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