With the final stages in the election fight heating up over the negative gearing pro and contra dance between the party policies, many property market voters are baffled and in uncertainty of what may lie ahead.
While for plenty of people that are already invested in the property market the possible changes may drive them to offload their negatively geared properties, many others are still confused as to how their voting decision would affect their retirement planning and, specifically, their property investing strategy.
Sam Comer, senior manager of tax advisory for Crowe Horwath (part of Findex), says: “Abolishing the current negative gearing and capital gains rules could have a drastic impact on the property market, possibly flooding the market with property as investors transition to different financing models.
“For property investors, their election decision could largely be steered by the impact any new policy will have on their investments and retirement planning,” she says, explaining that with property usually being purchased with much higher leverage than shares, a change in the ruling would have the most drastic impact on the property market, which has always been a strong backbone of the Australian economy and investment main stake for mum-and-dad investors.
“If we’re seeing the negative gearing ruling changed, I anticipate a strong shift toward SMSF [self managed super fund] investing, taking the already strong trend to a massive migration.
“I don’t think the full flow-on effect a new ruling would have has even been contemplated.”
For those voters unsure of the potential impact their vote would have on their investment strategy, RateCity.com.au has released an Election Calculator.
The quick, 10-question survey-based app (which you can find at www.ratecity.com.au/election-2016) enables voters to see the effect for them financially based on their situation and vote, giving them an added insight for when they have to make their choice come election day this weekend.
With 46 per cent of all property loans going to investors, other issues of the election battle are somewhat overshadowed by this heated property topic.
We could expect to see many Australians literally resorting to voting with their wallets and from a place of wanting to protect and safeguard their investments, rather than a more holistic assessment of each party’s policy.
According to statistics from the Election Calculator, in New South Wales:
- 55 per cent of people under 80k, (12.3 per cent of total) plan to negatively gear
- 34.6 per cent between 80-180k (20.4 per cent) plan to negatively gear
- 10.3 per cent over 180k (6.6 per cent) plan to negatively gear.
In Victoria, the numbers are:
- 62.2 per cent under 80k (11.2 per cent)
- 35.2 per cent between 80 and 180 (18.8 per cent)
- 7.6 per cent over 180k (5.1 per cent).
In Queensland:
- 56.1 per cent under 80k (7.2 per cent)
- 35.3 per cent between 80-180 (16.7 per cent)
- 8.6 per cent over 180k (5 per cent).Based on the data received, RateCity claims that in terms of election polls, Labor should be further ahead than is currently depicted in news polls.
There’s no doubt it’s going to be be an interesting election, with voters being urged to look at their choices objectively and consider the full impact their vote could have on their property/retirement investment planning, along with other important issues.
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