How the upcoming election could impact your property investment

With a Federal election looming, changes to the way we invest in property could be on the horizon.

Many potential buyers are understandably in a holding pattern, waiting to see who will take power on the day and what their policies will mean for their investment.

There have been some radical changes proposed by the major and minor parties, who have differing objectives ranging from protecting the interests of current investors to opening the market up to young people who feel they have been locked out.

What a Labor win would mean

Labor has announced plans to get rid of negative gearing on existing properties and halve the Capital Gains Tax discount from 50 per cent to 25 per cent. This would lead to lower housing prices and higher rents. In fact, SQM Research has tipped that property prices will fall nationally by between 5 per cent and 12 per cent by 2022.

So while new investors may lose out on negative gearing (if they purchase existing property) and the generous Capital Gains Tax, they would benefit from more affordable investments with stronger rental returns.

Ultimately, this is a policy designed to benefit younger voters more than older generations.

What a Coalition victory would mean

Prime Minister Scott Morrison vehemently opposes Mr Shorten’s policy and warns that the property industry will suffer on the whole.

He is defending the rights of investors to enjoy negative gearing and generous tax concessions to get ahead in the property market.

With housing prices already dipping, he warns that changes to negative gearing could see a serious crash, commentary that can not be quantified but still has many investors worried.

His stance appeals more to older voters who have already invested in property.

Of course, there are other possibilities. The minor parties have their part to play and could find themselves in strong positions of power in the Senate or if there is a hung parliament.

Here is a brief overview of what the larger of the minors are promising:

Australian Greens

An unofficial alliance with Labor means the Greens would likely support their changes to property investment and oppose policy introduced by the Coalition.

Katter’s Australian Party

Maverick MP Bob Katter has a strong stance on people’s rights in their own homes. He will strongly oppose any measures introduced that could take away personal liberties for people inside their own boundary line.

One Nation

Senator Pauline Hanson is opposed to Labor and The Greens at present and as such, would be likely to side with the Coalition on investment property legislation.

United Australia Party

Leader Clive Palmer has emerged as an x-factor in his second coming at Federal political level and could have the numbers to hold the balance of power following the election. His major housing policy is to make the first $10,000 of every home loan tax deductible in response to Australia’s housing affordability crisis.

Looking to invest but don’t know how to get started? Get in touch with Marc Woolfson now to take the next big step on 0478 304 944.

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