Labor is proposing a double hit on housing that would affect all Australians.
Labor plans to end negative gearing as we know it by removing it for new purchases of existing properties. Together with their Capital Gains Tax increase, this represents a $31 billion Housing Tax that would hit all Australians, by reducing home values and increasing rents.
With a softer housing market, now is the worst time to introduce Labor’s Housing Tax.
It would also hit around 1.3 million Australian investors who use negative gearing for an investment house or flat. The ability to deduct expenses is a common feature of tax systems around the world.
Labor’s Housing Tax would change the goal posts on these mum and dad investors by making their investments worth less. It would have a flow-on effect across the entire property market and economy.
Two-thirds of Australians who negatively gear a rental property have a taxable income of less than $87,000. Around 72% have just one investment property.
Further impacting the housing market would be Labor’s plans to increase capital gains tax by 50%.
This would see Australians subject to a capital gains tax rate that is among the highest in the world.
The Master Builders Association found that Labor’s policies would result in up to 42,000 fewer new dwellings being built, 32,000 less full time jobs and an $11.8 billion drop in building activity.
Former Labor Treasurer, Wayne Swan, said it would be: "economically disastrous to do anything on negative gearing" - Radio 3LO, 3/5/2010
"I am concerned that it would do so much damage - unemployment, higher interest rates - it could tip us into recession." - Aussie John Symond, Founder of Aussie Home Loans, 19/11/2018
"Property investors are not rich 'property barons'. The overwhelming majority of property investors are everyday Australians on modest incomes." - Property Council, Media Release, 18/11/2018