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Election-proof property investing

Election-proof property investing

Another federal election is just around the corner, so we the people (rather than in-fighting politicians, for a change) get to decide who will lead the country.

For property investors, there is a stark difference between the major parties this go around, with Labor proposing to change negative gearing and capital gains rules.

What is the proposed change?

Labor has proposed restricting negative gearing tax to new properties, and reducing the capital gains tax discount by half, starting from January 1, 2020. Any existing properties will not be affected - they will keep full the negative gearing and capital gains discount benefits.

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Research shows only one-third of us actually understand the proposed negative gearing changes. Want to find out what it means for you?

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So how can you election-proof your property investing plans?

1.  Buy New

The good news is that no matter who wins the next election, negative gearing will still apply to new properties.

For many investors, this will simply be one more reason to buy new, because new properties will also give you:

  1. Greater depreciation tax benefit (which could add thousands to your bottom line each year),
  2. Fewer maintenance and repairs costs and headaches, and
  3. A higher rent return in many cases (because tenants like modern, new properties)

Add negative gearing to this list of benefits, and it’s easy to see why new properties are a smart choice for property investors.

2.  Buy Now

The other way to election-proof you investment property is to buy before the end of 2019.

Even if Labor win the next election, the proposed changes won’t come into effect until January 2020. Investment properties purchased before then will still come with the existing negative gearing benefit and capital gains tax discounts.

So if growing your investment property portfolio is in your future, you may want to take action sooner rather than later - to lock in negative gearing and capital gains discount benefits, while also taking advantage of the very good buying opportunities available right now.

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