PRDnationwide’s Chairman and Managing Director, Tony Brasier, has spoken to the Daily Advertiser today in support of the severe impact the proposed changes to negative gearing and capital gains tax (CGT) will have on the property investment market.
As a leader in the industry for over 40 years, Mr Brasier has a wealth of expertise in both the Australian and Global property sector and well remembers the last time a Labor Government abolished negative gearing, resulting in fewer investors and significantly higher rents.
Depending on who wins the May 2019 federal election, property investors could be facing major changes in policies.
Housing affordability and taxation arrangements for housing are going to be key issues in the upcoming Federal election campaign, and PRDnationwide has joined forces with The Real Estate Institute of Australia (REIA) and other industry advocates to ensure that the debate is steered towards the best interest of property clients and not merely a way of gaining votes.
The first thing to note is that negative gearing is not a special concession for property. It is a legitimate deduction of expenses when earning income from investments. The ability of investors to gear and use debt is a crucial part of investing and fostering economic growth. The ability to deduct the cost of debt and losses against income is necessary to ensure that investments are not over taxed.
The current tax arrangements, in treating property no differently to other forms of investment, provides an incentive for private investment which increases supply for our growing population, keeps rents affordable and eases the burden on social housing. Further serving and advancing the public interest under the current taxation arrangements.
The REIA announced that there is ample research that shows that negative gearing and the CGT discount is not driving excessive, unproductive and speculative investment in housing, but instead, it’s adding to housing supply, with currently $7 billion a year invested in new dwellings.
If there is a negative change in Government policy of restricting negative gearing, there will be many losers. Mum and Dad investors wanting to purchase an existing investment property to supplement their retirement savings will no longer be able to claim a modest taxation deduction. Among investors currently claiming negative gearing deductions are 75,000 nurses and teachers – not the type of taxpayers who should be penalised.
The three pillars of funding retirement are self-funded superannuation, the aged pension and savings. The fourth pillar should be home ownership combined with property investment, and Government should be providing incentives to encourage investment rather than restrict negative gearing and double capital gains tax. Voters need to be fully aware of these proposed changes and know the impact on their financial future to ensure they make their vote count on May 18th.
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