According to a new study by PIPA (Property Investment Professionals of Australia), the Labor government is expected to spend $ 32 billion over a period of just 10 years to reduce negative capital gains and reduce tax breaks on gains in capital.
PIPA's modeling indicates that, if the proposals succeed, many investors could be pulled out of the market, leaving a gaping hole in government coffers.
The workers' claim that their policy would save $ 32 billion over a decade was fancy, as the sharp drop in the number of investors would result in the government losing that amount, the president said. of PIPA, Peter Koulizos.
"In addition, investors are already paying nearly four times the capital gains tax, which they perceive as negative compensation over a period of 10 years, so that the government is already financially ahead, "he said.
According to the PIPA model, an investor who buys a property today of $ 675,000 would receive about $ 23,583 in negative benefits over the decade, but would pay $ 104,703 in capital gains tax if he sold that asset. This would leave the federal government a net gain of $ 81,118.
Conversely, modeling indicates that a Labor government could lose between $ 10 billion and $ 32 billion over 10 years with the adoption of its gear proposals. negative and tax. In addition, fewer investment properties would push rents up and discourage first-time homebuyers from entering the market, PIPA said.
Modeling is not the worst case scenario, Koulizos said. This takes into account the fact that 45% of the investors indicated in the 2018 PIPA Investor Sentiment Survey stated that they would put their investment plans in abeyance if Labor made the proposed changes.
"I have no doubt that limiting the tax relief on capital gains achieved by the federal Labor Party will discourage real estate investors from buying real estate," Koulizos said. .
While workers say they want to encourage investors to buy new properties, industry research shows that 93% of investors buy properties that are already well established because their potential for capital growth is greater than that of new properties.
"According to the proposed amendments, investors will pay more capital gains tax, but since they have probably bought a new property, this will result in lower capital growth and therefore a reduced tax payable at the end of the year. government, "said Koulizos.
Mr. Koulizos also said that the reduction in income would probably be even greater after the 10-year period, as fewer investors would pay taxes on their properties benefiting from positive indexing, as well as capital gains taxes on the strong growth of equities. Usually occurs after 10 to 20 years of holding an established property.
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