I have been asked my opinion on possible changes to negative gearing and what you can do to protect yourself from any such changes. Whilst it is still unclear what changes to negative gearing might be introduced by either of the major parties, the good news is that they have both said any changes WILL NOT be retrospective.
Retrospective legislation is like changing the rules of a football game after the game has been played.
How does this relate to negative gearing?
If a client has a negatively geared investment property before the rules change, the old rules will still apply.
My message, today, is that if you have been thinking about investing in residential property to take advantage of negative gearing then NOW is the time to get started before the rules change.
Related Reading
to-restrict-advantages-of-negative-gearing/”>Labour Party to Restrict Advantages of Negative Gearing
What if I invest in property and then lose my Job?
Bill Shorten said that when Paul Keating wiped negative gearing in 1985, it had no adverse effects on rents. Bill must have been on another planet because there was a huge increase in rents and a shortage of public housing.
In the first 12 months of stopping negative gearing, rents in Sydney increased by 60% and the Housing Institute of Australia predicted a further 30% if negative gearing was not reintroduced.
What happened?
Keating realised their mistake and to get investors back into the market allowed a 4% depreciation on the cost of new buildings. The NSW government were so concerned they asked that this depreciation incentive be increased to 8%.
So was the 4% depreciation enough to bring investors back to the market?
No, and before the end of 1987 Keating reintroduced negative gearing but still included a 2.5% depreciation on new buildings which exists till this day.
Bottom line
If you are interested in creating wealth and saving tax with solid bricks and mortar in Brisbane’s best suburbs, I respectively suggest that you make an appointment to see me before the rules change.
Steve Taylor
At the helm of Steve Taylor & Partners, Steve Taylor has been delivering expert advice and product knowledge to clients for over 30 years. Steve Taylor & Partners provide individuals, couples and families with the right strategies to create wealth and change their lives with solid bricks and mortar.
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the subject being discussed.
