Financial planners who work with property investors in Perth are watching closely to see if the Government follows through on a recent report by the Senate Economic References Committee.
For property investors, there were two giant takeaways. The committee recommended that stamp tax duty be replaced by “more efficient taxes.” It also recommended that negative gearing be eliminated for established properties, while recommending that elimination be strongly considered for new properties.
The committee’s aim is to make housing more affordable while increasing the new housing supply. They also want to make it easier for baby boomers reaching retirement age to downsize if they desire to do so. Other suggested actions included tax reform, the zoning of more land for residential use and infrastructure investment.
What it Means to You
We won’t pretend to know what the Government intends to do or how long it will take if they do decide to take action, but we can see that eliminating the stamp tax duty would be a great start towards removing obstacles to buying a house.
We believe that real estate investment is the best chance the small investor has of becoming a large investor someday. Intelligent and aggressive real estate investing is the fastest way a small investor can consistently amass a portfolio that will allow early retirement. If stamp tax duty is eliminated, it will allow investors to become more aggressive because they won’t have to come up with as much money to purchase a property.
As for negative gearing, we would like to see it remain because it is a great tool for some properties. However, we don’t think negative gearing is necessary if the investor is buying the right properties and is receiving the right financial advice.
Bottom line: if these reforms happen, we think they will help small investors.
If you are interested in property investing, call Purely Finance today for a free consult: (08) 9453 8888.