A listener from our Thursday morning Q&A session on 4HI (6.45am) said he saw Bill Shorten interviewed on TV. In the interview, Bill Shorten mentioned children starting school at 3yrs of age. When asked how his government was going to fund it, Bill answered, “With the savings on changes to negative gearing!” The listener, like many, asks “Did I hear right & if I did, how will it affect me?’
If Labour wins the next election
It is correct to say that Bill Shorten intends to fund children’s education expense, through changes to negative gearing and other investment strategies, if his party wins the next election. The cost of this proposal is speculated in varying reports, but would appear to be about $1B P.A. If earlier education for youngsters goes ahead, and negative gearing wears the cost, the changes will only apply after the election. That is, if you have a negatively geared property now, or purchase one before the next election, there will be no change to your investment set-up.
When is the next election?
The government could call it earlier, but unless they have a huge improvement in the poles, that is unlikely. The last federal election was on July 2, 2016. Which means the house will expire on August 29, 2019. Utilising the maximum period allowed for a campaign, the last possible day for a house of representatives’ election is November 2, 2019.
What can I do to prepare for this?
If you have an existing set-up, you don’t have to worry. However, if you are thinking of starting or adding to a negatively geared residential portfolio, you only have possibly…
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…six to eight months left before the changes if Labour is elected. Furthermore, if you are thinking about getting your money out of your existing Super account and starting an SMSF (Self Managed Super Fund), it could take a few months. The time to act therefore, is now.
How much time does it take to set up an SMSF?
Times vary from client to client. While an easy process, it can sometimes take several months to set-up a SMSF. This is due largely to the tracking of paperwork between institutions.
What are the benefits of a SMSF?
There are several benefits to creating a Self-Managed Super Fund. Currently the majority of Superfunds have their clients’ money invested in Shares. Last week Steve predicted a large share price reduction & it happened the next day. Many people who have super invested in the share market have lost up to 5% in the last week. Secondly, it has been considered that the future government might freeze your Super & pay it back to you in the form of a pension. This is every excellent reason to invest in solid bricks & mortar.
Need help to start your residential property investment portfolio the right way or want to discuss this more? Schedule a free, no-obligation consultation and let’s discuss your options.
If you prefer to listen here is my radio interview on Emerald 4HI:
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