Will Labor Win the Next Federal Election
Does Labor have a chance of winning the next Federal Election?
I believe that Labor are on track to win the next Election but a week is a long time in politics.
Devastating in two major ways
Labor is committed to its proposal in last year’s Election to wind back negative gearing. This not only hurts the wealthy, but also many workers on average wages who have the ability, desire, and discipline to build a property investment portfolio.
And the other effect of Labor’s Policy?
Bill Shorten has announced that Labor will not allow Self Managed Superfunds to invest in residential property investments.
If Labor win the next Federal Election there will be:
- No negative gearing as we know it
- No residential property investment with a Self Managed Super Fund
However, if you have already invested before the Election you should have no worries.
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When Paul Keating abolished negative gearing in the mid 1980’s it had no effect on anyone that already had negatively geared property, only on those after the policy was introduced.
Did Keating’s plan work?
No, it was a total disaster. All it did was limit housing available for rent, which in Sydney alone caused rents to increase by 60%.
What happened then?
The additional incentive was that you could depreciate the cost of the building of a new house at 2.5%. Initially this was at a flat rate that expired after 40 years, but now has no time limit.
With our executive 5 bedroom homes at about $520k, that tax deduction alone is worth about $6k per year and remember, that is a flat rate i.e. for the building depreciation alone you can claim approximately $6k p.a. with no time limit.
What do I think of this whole matter of housing affordability?
I think it is stupid. It should never be a problem to be solved by our Federal Government as it only applies to Sydney and Melbourne. It would best be addressed at a local Governments level. Try telling people in regional Australia that there is a housing crisis.
When I was a young bloke, we would not ever think that the Federal Government had a responsibility to solve our problems. This week’s Australian had a heading “Meddling in Markets Produces Unintended Consequences” and I agree wholeheartedly.
I read an interesting article about that by Grace Collier in the Australian.
Among other statements she said, “The best thing would be for the Authorities to back off, reduce taxes and regulation and let the market work”.
The bottom line is to start your property investment portfolio now before it is too late.
Steve Taylor
Need help to start your residential property investment portfolio before the Labor win? Please contact our office to schedule a free, no obligation consultation and let’s discuss your options.
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DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the subject being discussed. The figures stated in this article were accurate at the time of publication. For up to date figures, please contact our office.
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