Home buyers waiting for Election could miss the boat
Though a Labor Party victory could see major reforms to negative gearing and changes to capital gains tax, home buyers should not delay buying property based on the outcome of the upcoming Federal Election, according to the Real Estate Buyers Agents Association (REBAA).
REBAA president, Rich Harvey, said house prices in Sydney and Melbourne had softened since the policies were first floated, and it could prompt a re-think.
Regardless of the potential changes, Harvey said negative gearing was a path to tax minimisation, and while it helps ease the burden of holding a property, it should not be the primary reason to invest.
“If you are relying wholly on negative gearing to prop up your investment, then the problem is with your portfolio, not the policy,” he said.
“If negative gearing is removed for established properties, it will mean investors must carefully consider the rental return before buying as there would be no tax subsidies for ongoing losses.”
Harvey also highlighted that investments held before the change comes into effect would be grandfathered or excluded and, likewise, Labor’s plans to reduce the discount on capital gains tax from 50 per cent to 25 per cent would all be fully grandfathered.
The REBAA president said buying in softer conditions was also more favourable for buyers, who could negotiate a far better price on quality property.
“If you wait to see what happens at the ballot box; you could miss the boat and your chance to lock in the best possible return.”
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