At the next Federal Election in May 2019 the continuation of Negative Gearing will be at stake. Labor and the Greens want it gone and predictions are that Labor will win the election.
Adelaide South Property has written four previous articles on this same subject since 2014 discussing at least four previous times Labor has been nagging to get the same things changed. Is it inevitable that change will come this time? Does nagging work?
It doesn’t look good for investors. Can we push back by advocating a vote for the Coalition to try to stem the tide of rot?
Labor plans to limit Negative Gearing to new housing but will allow those who already have Negatively Geared properties to keep their concession. They also plan to reduce the capital gains tax (CGT) concession from 50% to 25% for properties owned for longer than 12 months. Again anyone with property bought at the time the 50% concession applied will keep it. The changes also won’t impact investments made by superannuation funds.
By conceding these compromises instead of advocating immediate and total loss of all benefits Labor hopes to minimise opposition. A cunning plan!
Labor won’t stop until all tax breaks are gone.
They will keep going until, in the course of time, all concessions will be gone.
Think of nudging. This was a term explored in great detail in the 2008 book; ‘Nudge’ by behavioural economist Richard Thaler and law scholar Cass Sunstein. It’s a concept that can be applied against people for just about any purpose.
Imagine A(Labor) wishes to influence B(Investors & Coalition) to change their position on this issue to agree with them. This is done without B feeling they have lost their ability to choose. B is regularly given the chance to make up their own minds on a constantly diminishing range of options. B’s opinions are constantly influenced by subtle propaganda (through the media who agrees with A). Over time B accepts that the final outcome had been inevitable from the beginning. And so we all accept that the simple rules of business, that losses should be written off against gains, should never have applied to residential rental property investment.
Maybe they could have called the book ‘Nag’.
The big fear is that not only will a stable and relatively risk free method of accruing retirement wealth dwindle for the average person but the supply of rental housing will dry up until the government has to become the landlord of the future, just what Labor wants.
Will investors keep pressure on government or just let the rot set in?
As a life-long Labor supporter I reluctantly see they have a lot of deficiencies in policy but we at Adelaide South Property need to support whatever and whoever will look after the interests of our customers.
The real take away from this is that anyone looking to invest should do so NOW in order to secure the current tax benefits.
To find out how to secure tax breaks for your rental properties contact Mark Nielsen at Adelaide South Property, 0414 969 940.