Has Labor’s tax reform killed ‘rent-vesting’ for young Australians seeking a foothold in the housing market?
Summary
Australia’s Labor government has introduced tax changes on investment properties that make a popular way for young people to buy homes, called rent-vesting, less attractive. These changes include higher capital gains tax and tighter rules on negative gearing, which may slow down young Australians’ ability to buy their first home.Key Facts
- Rent-vesting lets renters buy cheaper properties elsewhere while continuing to rent in preferred areas.
- The government’s budget raised capital gains tax and limited negative gearing, a tax benefit for landlords.
- These changes aim to reduce investor competition and help more renters afford their first home.
- The typical Australian home costs eight times the average income, making saving a deposit very hard.
- About 53,000 Australians have bought investment properties since July 2019 to help get into the housing market.
- Negative gearing rules will change in July 2027, removing tax deductions for new investors after that date.
- Experts say banks may lend less to property investors because of the new rules, reducing their buying power.
- Some young investors accept the reforms but worry their home-buying plans will take longer.
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