Federal tax cuts may go

Latrobe Valley tax and real estate professionals believe a plan to end negative gearing would be detrimental to the economy.

A report put to the Federal Government by the Australian Council of Social Service called for the government to restrict tax deductions for negatively geared investments and reduce concessions on capital gains tax.

Currently, property investors are able to claim losses on investment properties such as maintenance and interest paid on mortgages in annual income tax declarations.

The plan showed the government would save more than $1 billion in revenue per year.

Stockdale and Leggo Latrobe Valley Morwell managing director Jim Demetrios said the government would lose out in the long run if they were to bring in the change.

“If they tried to do anything like that you’d find the attraction of buying rental properties for investment would lessen,” Mr Demetrios said.

“Unless the government themselves are prepared to provide housing for the community the rental properties just won’t be available.

“The government has been trying to get out of providing housing for years and it’s been advantageous for the investor to take on the property costs and responsibilities. They might save one way but they might spend it another way with housing.”

Despite the plan’s inclusion in a recent discussion paper on tax reform, Treasurer Joe Hockey said the changes were unlikely but would not be ruled out.

Traralgon accountant Sharon Bonnor said if implemented, the revenue raiser would have a “huge impact” on the property market.

“There are a lot of people out there that have negative geared properties that are reducing their income tax,” Ms Bonnor said.

“Therefore what they’re doing is using the tax and they’re saving to then pay off these properties.”

Ms Bonnor believes there would be a lot less investment properties and it would impact on people trying to save for the future.

“It’s going to impact across the board. Not only are you going to have people not investing, you’re property prices are going to go down,” Ms Bonnor said.