Labor would introduce its changes to negative gearing and capital gains tax by January 1 next year if it wins the May election. The negative gearing reforms won't apply to newly-built homes and existing investment properties, while the capital gains tax discount will be halved for investments entered into after January 1. Shadow treasurer Chris Bowen said the property tax changes would raise $2.9 billion over the forward estimates, and save the budget $32 billion over a decade. "If you already use negative gearing, nothing changes. It's not retrospective. And you can still use it for new houses," he said in a statement on Friday.<doc-sep>Labor plans for changes to capital gains tax and negative gearing to take effect by 1 January if it is elected at the May election. On Friday the shadow treasurer, Chris Bowen, announced Labor will take just seven months to consult on and pass its signature housing tax policies and added a new measure to improve tax concessions for build-to-rent schemes. The timeframe maximises the revenue that Labor can expect from the measures but seemingly closes off the option of delaying the start date in order to soften its impact on a falling housing market. If Labor is elected, the capital gains tax discount for investments entered into after 1 January 2020 would be halved and from that date only new investment properties will qualify for negative gearing, which allows rental losses to be deducted from other income. The measures are estimated to raise $2.9bn over four years or $35.1bn over 10. Bowen told ABC Radio that 1 January 2020 was a “sensible start date” and Labor had listened to concerns they could try to rush the measures in by 1 July this year. The timeframe would allow for a “proper legislative process”, he said, warning crossbench parties to respect Labor’s mandate because by that stage Labor will have taken the housing tax policy to two elections. Bowen suggested that bringing the policy in “at a quieter time in the property market over the Christmas period” would soften its impact. Labor first proposed cutting the housing tax concessions in February 2016. The proposals were rejected by the Turnbull government and became one of the major points of difference between the major parties at the 2016 election. Labor has stuck with the policies, which underpin its projected increases in social spending in areas like health and education, despite falling house prices in Sydney and Melbourne spreading to other capitals due to more restrictive lending practices. The Coalition argues the policies will increase rents and decrease the value of homes, which lose the negative gearing tax concession when sold into the secondary market. The assistant treasury minister, Zed Seselja, told ABC Radio that Labor was “delusional” to think introducing the measure over Christmas would soften the blow. “The problems with this aren’t going to be a short-term temporary problem over a summer break – these are problems that will last for a number of years,” he said. The Property Council of Australia said it was “relieved” Labor would not be trying to introduce the measures by 1 July if it wins government because to do so “would have required retrospective legislation, rushed drafting and no opportunity to take expert advice from Treasury and stakeholders”. “The Property Council remains strongly opposed to this policy and deeply concerned with its potential impacts on housing markets and the broader economy at this uncertain time in the cycle,” it said. On Friday Labor also announced a new policy to increase tax concessions for build-to-rent schemes to encourage institutional investors into the housing market. Bowen said Labor will cut the managed investment trust withholding rate in half from 30% to 15% on tax distributions attributable to investments in build-to-rent housing. He said this will “encourage more construction and stimulate the housing market”. The Property Council’s chief executive, Ken Morrison, welcomed the measure, describing build-to-rent housing as “an internationally proven way to provide better housing choices for people who rent their home”. Morrison said the measure would help attract investment and “enable industry to partner with government in providing more affordable housing choices”.<doc-sep>A federal Labor government would limit negative gearing concessions to new properties from January 1 next year, earlier than many analysts and commentators predicted. Key points: Federal Labor argues negative gearing concessions are too generous Federal Labor argues negative gearing concessions are too generous The change would stop new investors from deducting rental losses from their income tax The change would stop new investors from deducting rental losses from their income tax It would raise an estimated $2.9 billion over four years Shadow Treasurer Chris Bowen said the long-awaited start date would still provide enough time for scrutiny of the legislation and more industry consultation. He again dismissed calls to delay or phase in the change, which is a key point of difference between Labor and the Coalition before a May election. "This allows it to come in at a quieter time in the property cycle — obviously Christmas and New Year being a quieter time — a good smooth time for implementation," Mr Bowen said. "This strikes the right balance." The change would stop new investors from deducting rental losses from their income tax bill, raising an estimated $2.9 billion over four years. Chris Bowen said the start date would provide time for scrutiny of the legislation. ( AAP: Lukas Coch Federal Labor has argued this concession is too generous and is unfair because it makes it harder for younger Australians and first-home buyers to enter the market. Ending the tax concession on January 1, rather than July 1 as many expected, would mean a Labor government begins to collect a share of that $2.9 billion earlier in its first term. Mr Bowen also argued that delaying the change until property prices recovered from a recent downturn in capital cities would only increase market uncertainty. "At the last election we said it would come into force 12 months after the election, this time we are saying seven months and they are roughly comparable timeframes," Mr Bowen said. "This enables proper legislative processes, draft legislation, proper consultation about how the legislation should be framed." Labor eyes crossbench amid Coalition criticism The Assistant Minister for Treasury and Finance, Zed Seselja, warned the January start date would hurt both home owners and renters. "I think it means the pain in the property sector and for millions of Australians would start earlier than expected if Labor comes into office now," Senator Seselja said. "Just last week we had SQM Research talking about massive rental increases right across Australia if Labor's policy is enacted." He also dismissed Mr Bowen's suggestion that implementing the change over the Christmas holidays would help make the transition smoother. "I think that's delusional," he said. "The problems with this aren't going to be a short-term, temporary problem over a summer break. "These are problems that will last for a number of years." If Labor wins the election, it may still need to negotiate with a Senate crossbench that will still include Pauline Hanson and Cory Bernardi. "I do have some confidence, of course anyone who predicts the result of the Senate is a very brave person," Mr Bowen said. "I will be making the case directly and personally to the senate that we have taken this to not only one, but two elections. "We have been upfront about these discussions." Sorry, this video has expired Aussie Home Loans founder John Symond says negative gearing should be treated "very carefully". Labor to boost tax concessions for institutional investors The Federal Opposition has also announced it will reduce taxes for institutional investors that build rental properties. Labor would cut the managed investment trust withholding rate in half, on tax distributions attributable to investments in build-to-rent housing. "This means that eligible build-to-rent investments will pay a 15 per cent tax rate, not the 30 per cent rate proposed by Scott Morrison, which would be double the rate paid for investments in shopping centres and office buildings," Mr Bowen will tell a Sydney audience today. "It will make a build-to-rent [project] viable in Australia and provide a tax rate in keeping with the treatment in other countries." Editor's note (1/4/19): This story has been updated to clarify Labor's policy is to cease negative gearing on existing properties, not on new investors.<doc-sep>
With Australian housing prices declining rapidly over the past year, first homebuyers could potentially corner the market. With Australian housing prices declining rapidly over the past year, first homebuyers could potentially corner the market.... Federal Labor would introduce changes to negative gearing and capital gains tax by January 1 next year if the party wins the May election. The negative gearing reforms won’t apply to newly-built homes and existing investment properties, while the capital gains tax discount will be halved for investments entered into after January 1. Shadow treasurer Chris Bowen says the property tax changes will raise $2.9 billion over the forward estimates. RELATED: Negative gearing ‘scare campaign’ RELATED: Federal election 2019: Bill Shorten says inequality real threat RELATED: Federal election 2019: Labor’s negative gearing and capital gains tax “If you already use negative gearing, nothing changes. It’s not retrospective. And you can still use it for new houses,” he said in a statement on Friday. “Federal Labor’s plan is good for the budget, good for housing construction jobs and fair for first home buyers.” Labor also announced it would cut the managed investment trust withholding rate in half, from 30 per cent to 15 per cent, to encourage new housing. The Property Council of Australia said it remains strongly opposed to the tax overhaul. “And deeply concerned with its potential impacts on housing markets and the broader economy at this uncertain time in the cycle,” the group said in a statement. “In particular, we are concerned with the impact of these tax changes on new housing construction.” The Party Games newsletter Get your political briefing from news.com.au's political editor Samantha Maiden. Sign up The Party Games newsletter Success! Check your inbox for details. See all newsletters A recent survey commissioned by the Property Council found the policy won’t stimulate new housing construction as hoped. — AAP