Small businesses to lose out from proposed negative gearing changes

13 May 2019
| By Laura Dew |
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More than $1.8 billion per year in repair and maintenance work on negatively geared homes could be lost if Labor goes ahead with its policy to impose restrictions on the measure.

Negative gearing allows investment property owners to offset costs against rental income and claim any loss as a tax deduction. If elected, Labor said it would restrict the benefit to newly-built homes from 1 January 2020 and halve the capital gains discount for all assets purchased after that date.

According to Denita Wawn, chief executive of Master Builders Australia, the move attacked the small businesses who carry out this repair work on the properties.

Across Australia, around $1.8 billion is spent annually on repairs and maintenance of negatively geared properties.  The biggest proportion, some $515 million, was spent in New South Wales followed by $509 million spent in Queensland.

“Thousands of small mum and dad building businesses and tradies in every city, town and region around Australia would feel the impact of Labor’s policy progressively if it is rolled out,” said Wawn.

“This work is the bread and butter of so many builders and tradies and Labor’s policy will hurt the viability of their business and will put their livelihoods at risk.”

She said the move was particularly important given the falling housing markets in cities like Perth and Adelaide.

“The next Federal Government needs to back the thousands of small building businesses who repair and maintain negatively geared investment properties, especially as the housing market softens, not bring in policies that will put their businesses at risk.”

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