00:00The federal budget has been handed down and it does include some major changes
00:04that will affect property investors. The headline is that the government is
00:09scrapping the 50% CGT discount moving forward. In its place property investors
00:14will pay a base rate of at least 30% tax on any gains that they make from
00:19property sales. You might be wondering if it's time for you to panic but maybe not.
00:24The changes don't take effect until July 1, 2027 and that's a very important
00:30date. The current CGT settings are also going to be grandfathered up until July 1,
00:372027. But what exactly does that mean? Any gains that you've made on an investment
00:43property up until July 1, 2027 will still be subjected to the 50% discount. However,
00:51if you hold onto the property beyond that period you will still need to pay the
00:5630% base rate on the gains after that date. Does that sound complicated? That's
01:02because it is. One expert has told the senior that the real winners of this
01:06budget are accountants and that's because property investors are likely to find
01:10themselves quite confused when they sell an investment property and it's taxed at
01:15two different rates over two different periods of time.
01:18Is it all doom and gloom? Not exactly. You can access the 50% CGT discount if you
01:25invest in a new build. You can even subdivide an existing property, put some
01:30new housing on that and you'll find that you're able to access the 50% CGT discount.
01:37People on the age pension or any kind of income support will also not have to pay the
01:4330% minimum base rate on investment properties. That is not all. The
01:49government has also scrapped negative gearing moving forward unless you invest
01:54in brand new housing. That is not all. If you're already negatively geared you will
01:59also be able to continue accessing that tax benefit. Why has the government done
02:05this? The government believes that these changes taken together will help an
02:10extra 75,000 first home buyers enter the market. They say these changes will help
02:16address the intergenerational inequity that is currently locking people out of
02:20buying homes. The move also means that investors are going to pay a tax rate that
02:25is quite similar to what workers pay on their income tax. That is the ultimate goal.
02:30If you want to know more you can read our explainer here and let us know what you
02:35think of the changes in the comments.
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