Friends, it is with a heavy heart that I must tell you this news. Labor has nixed its negative gearing policy plans. I know that terms like ‘negative gearing’ and ‘income less expense’ can be a bit hard to understand, but the thing is, this news actually kinda sucks. Lemme explain to you why.
On Monday, Anthony Albanese, leader of the Labor party, made an announcement that his party had come to the decision that they would be abandoning their negative gearing policy. Their desire to keep it going into the next election had shifted. A gear shift, if you will.
So basically, at the next election, Labor will not be coming in with a plan to limit negative gearing. It’s heartbreaking because they’ve held onto it since 2016.
“Our focus is on making sure Australia emerges from this crisis stronger and more resilient – with an economy that works for working families, not the other way around,” Albanese said in a statement.
“Over eight long years in government, the Coalition’s record is clear in the lives of everyday Australians: stagnant wages, insecure jobs, increased costs for health care and childcare, longer waits to see a GP, and a trillion dollars in debt.”
Bill Shorten (remember him?) was the one who first established the plan back in 2016, and stuck by it again in 2019.
Essentially it aimed to make first homebuyers have an easier experience finding an affordable house while stripping older property owners who love a bit of extra income of their financial incentives.
Negative gearing is this odd thing that goes on in Australia despite never being mentioned in legislation at all, and just by existing it encourages older Aussies to buy more and more homes, while younger people struggle to buy any.
Still confused?
Basically, when an individual buys a property and rents it out, there are many costs associated with that, including paying back the bank if you’ve taken out a loan.
If the money that this individual makes from renters in that property becomes less than the amount that this person spends monthly on the property, then they can claim it on their tax and pay a bit less at the end of the financial year.
Ultimately, this individual will sell their property and make a heap more than they ever spent on it, thanks to the lovely tax incentives they get from losing out. Negative gearing, folks. You’ve geared, but negatively…
So, because Labor is gonna nix this plan, it basically means that neither Liberal or Labor are doing anything about this constantly occurring thing in this country that benefits people who just buy a string of properties for the sick gains.
Another loss for first-time homebuyers I guess. No positive gears here.
