Critics warn of rent hikes and a 'punitive raid' on investors. According to Daily Mail, landlord Stephen O'Brien said renters could face massive rent hikes if negative gearing is abolished. Geoff Wilson, founder of Wilson Asset Management, slammed the proposed changes as 'a punitive raid on aspirational Australians'. However, analysis by the e61 Institute found that current tax settings create an 'extra artificial incentive' for landlords to borrow as much as possible, with 46,000 out of 900,000 property investments being economically unprofitable but profitable due to the CGT discount.
The government is also considering broader CGT changes, including reducing the discount to 25% or scrapping it entirely, potentially extending to all asset classes, according to Daily Mail. ACOSS analysis of ATO data shows investors in the electorate of Wentworth claimed about $1.8bn from the CGT discount in 2022-23, and the five highest earning electorates capture 22% of all CGT discount expenditure nationally.
Why would I be running it as a loss if there are deductions to claim? What's the point – wait for the capital appreciation over time only to be substantially slugged on that as well? Where is the incentive to provide private sector rental housing?
Prime Minister Anthony Albanese argued tax reform is necessary for social cohesion, saying resilience is an economic imperative to protect against economic division and social dislocation. Treasurer Chalmers warned there will be little room for more cost of living support in the budget and ruled out an immediate extension of the fuel excise cut. According to Daily Mail, Chalmers hinted that changes to negative gearing and CGT would be transitional with grandfathering, and said the government is not targeting a certain outcome on price.
Our investment property is on the coast in a high-demand location, within walking distance of a patrolled beach. I know we can obtain a much higher price. The fact that I can negative gear it with the current rental means everyone wins – tenants and us. If there are no deductions, why run my investments at a loss? So who crashes out from Chalmers' reforms? It won't be me.
This isn't reform. It's theft from every aspirational Australian under 40 trying to get ahead. Chalmers is burning the ladder while the boomers are at the top.