Federal Politics

Shorten's negative gearing plan wins support in investor heartland

It's home to more negatively geared investors than anywhere else in Canberra, but those shopping in postcode 2615 this week were backing Bill Shorten's plans to scrap the tax deduction.

Roger Taylor, 72, owns his own home and was one of those at the Kippax shops in Holt who said anything which helped people get into their first property was welcome.

"It's not a bad idea to restrict negative gearing just to new homes," he said.

"I paid my home off in 1988 but I don't know how young people can start off with today's prices."

Charnwood renter Saskia Frugte, 42, who works at Kippax, said if it helped make it easier for new starters she supported it.

"I would love to own a first home, but on my income it's not a reality," she said.

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Postcode 2615, which includes the west Belconnen suburbs of Latham, Holt, Flynn, Florey and Melba, was home to 2990 negatively geared investors, according to ACT Property Council analysis.

Federal Labor wanted to end negative gearing deductions from July 1, 2017, except for investors in newly built homes. The policy would not apply retrospectively, but Labor has forecasted it would save the budget $32.1 billion over a decade. Capital gains tax deductions would also be halved under a Labor government.

Steve Jenkin, 61, said the tax deductions were a "perverse incentive" for individuals who were effectively running a business losing money on the side.

"That's bad business, why should the taxpayer foot the bill?" he said.

He said deductions once made sense when marginal tax rates were significantly higher, but called on Labor to go further and remove the option for any property.

In contrast, owner-occupier Peter Jess said he opposed Labor's changes, as they would hurt supply of rentals for those who could not afford to buy.

ACT Property Council acting executive director Mary Wood did not comment on specific drivers for 2615, but said Canberra as a whole had a higher than average share of investors which made the changes more risky.

"This is believed to be because the workforce has different characteristics to the labour market in other capital cities – we have more people that come, go and come back," she said.

"There will always be a need for a large and competitive rental market."

Ms Wood said it would like to see the Opposition's modelling on house price impacts, but a rush to capture Labor's grandfathering provisions then an investor drought after July 2017 was likely if they were elected.

Malcolm Turnbull led the attack this week, warning it would reduce the value of families' most valuable asset, with a 5 per cent national fall flagged.

Nationally, the average claim for a negative gearing deduction is $9500.

The Coalition's policy has yet to be announced, but was expected to include caps on the deductions able to be claimed.

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