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Labor: restrict negative gearing

Getty

Getty

Bill Shorten says Australia’s tax system is like a “leaky bucket” and limiting access to negative gearing can help fix it.

In a speech to the NSW ALP conference on Saturday, the federal opposition leader revealed Labor’s plan in government to make negative gearing only available on newly constructed homes from July 2017.

The changes under a Shorten government would not affect the tax arrangements for investment properties purchased before July 2017.

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Capital gains tax concessions would be cut from 50 per cent to 25 per cent, also with no change to the rules applying to existing assets.

And the family home, along with personal superannuation, would be 100 per cent capital gains tax free.

“We’re doing this because 30 years ago, houses cost around 3.2 times average income — today it’s 6.5 times average income,” Mr Shorten said.

“Labor will help level the playing field for first home buyers competing with investors and we will put the great Australian dream back within the reach of the working and middle-class Australians who have been priced out of the housing market for too long.”

Analysis by the McKell Institute shows the negative gearing changes could create up to 25,000 new construction jobs annually and add $4.5 billion to economic growth.

Costs for renters would also drop.

In a press conference on Saturday afternoon, Shadow Treasurer Chris Bowen said the plan “is the most significant policy announcement from any opposition in a generation”.

Negative gearing occurs when the cost of owning a rental property outweighs the income it generates each year.

This creates a taxable loss, which can normally be offset against other income, such as a salary or wage, to provide tax savings.

The housing industry has previously argued restricting access to negative gearing would reduce investment in housing, make it more unaffordable and put pressure on rents.

But studies by welfare groups and unions have pointed to economic benefits.

– with AAP and ABC

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