The Federal Government has announced major changes to negative gearing and capital gains tax (CGT).
The changes come despite promises made at last year’s federal election that Labor would not alter negative gearing or the CGT due to the risk of harming housing supply.
Treasurer Jim Chalmers said these reforms have been made to make the economy work in the interest of workers, businesses and future generations.
“Over 80 per cent of new investor lending goes to existing homes, and we want more investment to back the construction of new supply,” Mr Chalmers said.
“Our negative gearing changes put homeowners first and will help more Australians get a foothold in the housing market.”
Under the budget, negative gearing cannot be applied to existing properties purchased after May 12.
Properties purchased before May 12 will be exempt to these changes as well as any new constructions that contribute to housing supply.
The goal of this change is to get investors to move away from purchasing existing housing, and incentivise them to invest in new builds instead, to help mitigate Australia’s housing shortage and to improve the availability of liveable homes for Australian workers.
Prior to handing down the budget the profits made from selling an asset contributed to the seller’s taxable income, unless the asset was held for over a year, in which case only half the profit is counted.
From July 2027 any profit from assets will be taxed according to the growth of the asset, beyond the growth of inflation.
At a local level these changes increase supply of available homes to workers and first home buyers, while encouraging investors to contribute more towards increasing Wollongong’s housing supply, which has been in decline since the COVID-19 pandemic.
Gen Z worker, Annabel HIckling-Smith, who recently purchased an investment property, said the changes were not fair.
“It doesn’t exactly feel fair to young people who want to invest, not allowing them to take advantage of negative gearing while older people continue to profit,” Ms Hickling-Smith said.
“Hopefully (the government) is right and it’ll be easier for young people to buy their own home going forward.”
