There will almost inevitably be unintended consequences flowing from any changes to the negative gearing regime, according to H&R Block.
Labor has talked about removing negative gearing for all but new properties (and also grandfathering current arrangements, so taxpayers currently negatively geared would not be affected) and it could impact both the wealthy and lower income earners.
Mark Chapman, H&R Block’s director of Tax Communication points to Australian Tax Office (ATO) figures showing that 72% of investors with negatively geared properties earned $80,000 or less (2011-12 figures) and suggested the removal of negative gearing stood to impact many middle income families, who may be forced to sell their property as they see their tax bills rise.
Modelling by tax accountant H&R Block of the impact of Labor’s proposed changes indicate a taxpayer earning $220,000 a year, with two investment properties worth $450,000 and $550,000 each, would be about $19,000 worse off every year if these investments were made after July 1, 2017.
The Bottom Line:
Don’t panic – in fact, don’t do anything at present.
All the commentary is currently based on speculation and no one really fully understands the implications of the proposed changes yet.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
NEED HELP LISTENING TO MICHAEL YARDNEY'S PODCAST FROM YOUR PHONE OR TABLET?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.