Potential Changes To Negative Gearing And CGT

If Labor move into government in the forthcoming election, they have signaled their desire to limit negative gearing to new housing and reduce the CGT discount from a potential 50% to 25%.

The date of commencement of these changes will be from 1 January 2020.

Shadow Treasurer Chris Bowen signaled that all investments made prior to 1 January 2020 will be grandfathered from the new rules, as will the halving of the CGT discount to 25% only apply to those investments entered into after 1 January 2020.

If implemented these changes would net the government an extra $2.9 billion out to 2023 and $35.1 billion over the next decade.

There are considerations to be aware of – it does look like you will be allowed to offset negatively geared investments with positively geared investments so those investors that remain in a positive or neutral portfolio won’t be too concerned about the negative gearing aspect of these changes.

Note these changes aren’t law and possibly won’t be legislated, but it’s a good idea to be aware of them nonetheless.

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