Property Australia

Taxation and build-to-rent in play as federal poll looms

PROPERTY AUSTRALIA April 9, 2019

While the election date is still anyone’s guess, some policy issues have been clearly defined by both parties – and two of these have the potential to reshape Australia’s housing market.

Taxation issues, including negative gearing and capital gains tax, are expected to feature prominently in the upcoming campaign. Both parties also have clear policy positions on the emerging build-to-rent asset class.

Property Council chief executive Ken Morrison says the federal election will be held during a time of increasing uncertainty for the property industry, especially in housing markets.

“Getting the policy settings right, delivering certainty and securing the right incentives to support investment are essential,” Morrison says.

 

Taxation

The ALP has said it will abolish negative gearing on established property from 1 January 2020. Existing property investments prior to that date would be grandfathered, but negative gearing would only be applicable in future to newly-constructed property. Capital gains tax would be increased from 50 per cent to 75 per cent for investments entered into from 1 January 2020.

The Coalition plans to maintain the current settings for negative gearing and capital gains tax.

“We’ve warned about the risks of making changes to negative gearing and capital gains tax at this uncertain time in the property cycle,” Morrison says.

“We are, however, relieved that the Opposition has listened to industry views and does not intend to rush this change if it is to win government.”

 

Build-to-rent

The ALP has announced it will support the establishment of a build-to-rent sector by cutting the managed investment trust withholding rate in half – from 30 per cent to 15 per cent on tax distributions attributable to investments in build-to-rent housing.

The Coalition’s position is to retain the 30 per cent rate other than for some student accommodation and affordable housing. This has been reaffirmed in the passage of the Australian Government’s stapled structures legislation package last week.

“We’ve been calling for consistent taxation treatment for build-to-rent housing to support the growth of this sector at scale in Australia,” Ken Morrison says.

“Build-to-rent will deliver more choice and certainty for Australians who rent, while stimulating new construction and supporting jobs in our industry.”

An attractive investment framework is one of the Property Council’s five priority areas to support prosperity, jobs and strong communities.

Keep your finger on the policy pulse, as the Property Council tracks policy announcements that matter to property through our federal election campaign site.

The latest ANZ Property Council industry confidence survey for the June 2019 quarter will be published on Thursday 11 April.

Tags: ADVOCACY