Property tax concession change talk sparks uncertainty

Property investors are anxiously awaiting any potential changes to tax breaks after a week of mixed messages on negative gearing and capital gains tax.

Prime Minister Anthony Albanese has repeatedly insisted Labor has no plans to touch the tax concessions, despite reports Treasury was preparing advice on options to scale back negative gearing.

Negative gearing allows property owners to claim tax deductions on losses from investment properties, while the capital gains tax discount halves the amount of tax paid by those who sell assets owned for a year or more.

Senior members of the government throughout the week closed the door on taking any such reforms for investment properties to the federal election next year.

Mr Albanese reaffirmed his government’s approach to easing the housing crisis was to increase supply, including by giving first home buyers a leg up into the market by access to cheaper deposits through shared equity under the Help to Buy scheme.

Asked if he had directed Treasury to investigate options, Treasurer Jim Chalmers on Friday said: “It is not unusual at all for governments or for treasurers to get advice on contentious issues which are in the public domain.”

Opposition Leader Peter Dutton claimed Mr Albanese and Dr Chalmers were at war over the issue, and said Labor couldn’t be trusted after it backflipped on promises not to alter the stage three tax cuts.

Cabinet minister Bill Shorten, who led Labor to an election defeat in 2019 after proposing to limit negative gearing to new investment properties, said the government wasn’t taking the policy to the next election.

But independent Senator David Pocock said politicians could take a “sensible middle path” on such changes.

Alongside crossbench senator Jacqui Lambie, he presented commissioned research earlier this year which showed that limiting negative gearing to one property, allowing the capital gains tax discount for new builds, and grandfathering existing tax arrangements, could free up to $16 billion over the next decade to fund social and affordable housing projects.

The coalition has pledged to leave the tax concessions unchanged if elected to government in 2025.

 

Tess Ikonomou
(Australian Associated Press)

 

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