Retaining investment property concessions support rental affordabilityDOWNLOAD
Monday 3 May 2010: According to Deloitte Property Tax partner, Max Persson, the retention of Capital Gains Tax (CGT) concessions will support rental affordability and the recovery in the Australian commercial property markets.
Max Persson said that the Government has stated it will not reduce the CGT discount and will not impose a limit on negative gearing deductions.
“The Government has also rejected the Henry Review’s proposal to include both of these concessions within a broader 40% savings income discount regime,” he said.
“The retention of the CGT concession is good news for investors and renters around Australia.”
“The CGT discount has become an integral aspect of investing in real property, whether through a large managed fund or directly. Reducing the CGT discount would have resulted in a drop in investment in this sector, at a time when rental affordability is such a critical issue.
“For investors in the A-REIT sector who are now experiencing a recovery in the market, a reduction in the CGT discount would have diminished the after-tax value of their investments,” he said.
“The application of investment property deductions against income from other sources should also now be considered entrenched in Australia’s tax system, with the Government making it clear that it will not be altering this position.”
The Government has also indicated that it will not adopt recommendations to tax assets acquired before the introduction of capital gains tax in 1985.
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