The shadow treasurer Chris Bowen has announced that tax reforms which will limit negative gearing to new housing and halve the CGT discount from 50% down to 25% will be grandfathered and will apply for investments entered into after 1 January 2020.
Mr Bowen has also announced that Labor will revamp the Build to Rent scheme, giving institutional investors a tax concession to encourage the building of new rental properties.
If elected, the opposition will cut the managed investment trust withholding rate in half, from 30 per cent to 15 per cent, on tax distributions attributable to investments in build-to-rent housing.
The announcement will bring greater certainty to investors who were waiting on Labor to provide more details around its proposal. But, what isn't certain is the impact that the proposals will have on the property market before and after 1 January, 2020.
According to Mr Bowen, “Federal Labor’s reforms to negative gearing enjoy the support of many independent economists and think tanks like the Grattan Institute and Saul Eslake as well as international economic agencies like the International Monetary Fund.”
We will provide more analysis and commentary in our special Federal Budget blog next Wednesday.
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