Hollance is just discovering everything

Let’s play the biggest game of kick the can on the internet.

First off: SO MUCH about the coverage and complaints I've seen online are SO WRONG about this. It genuinely does not inconvenience literally anyone but instead is focused on structural reform to re-balance housing affordability in the long term. The people complaining they're hard done by are lying.

OK to basically explain negative gearing: it is a tax deduction when an asset (like a house) makes a loss. So if rent returns less than the cost of a mortgage in a year then the investor gets a deduction on how much their income is taxed, much like when you make a donation to charity that reduces your taxable income - only in this case instead of helping those in need it just means investors pay less tax.

The problem with that is that it means investors go "oh sick - even if I buy a house and it's unprofitable in the short term I get a tax deduction!" so they buy up all the existing housing at the lower end of the market and people who want to buy their first home can't afford anything.

The reforms are simple: just make it so negative gearing for any new investment properties have to be new properties. If you want a tax deduction: you need to add to the existing supply of houses. If investors want to make money off houses they need to actually contribute instead of buying up pre-existing supply and driving housing costs through the roof.

So investors can still be greedy - but they're encouraged to do it in a way that is mutually beneficial instead of just entirely bad.

BUT to avoid actually pissing people off and destabilizing the market they GRANDFATHERED in pre-existing negatively geared properties. SO LITERALLY ALL THE BOOMERS GOING "OH NO! HOW DARE LABOR FUCK WITH MY PROPERTIES! I WORKED HARD TO BUILD UP THIS PORTFOLIO OF INVESTMENTS!" are literally not impacted at all. Holy shit. They still get the exact same tax deductions as they did before for negative gearing.

So anyone crying about it is crying crocodile tears. Boohoo. They can get fucked for not understanding that they're literally still being spoon-fed tax deductions so as to not rock the boat too much.

"But will that not lead to less properties for renters and thus increase rents?" NO! Again: it's a tax incentive to build new houses. Plus, negative gearing does not drive rents down anyway. By making investment properties slightly less profitable it slows housing price growth and makes it less competitive for people wanting to buy a home - thus reducing the amount of people who need to rent thus reducing the demand on the rental market. Landlords are never going to reduce your rent if they don't have to but if there are less landlords then that means there's also more opportunity for renters to become home owners. Plus, other government initiatives to build houses will actually create a net positive in the amount of homes created.

BUT the one thing that DOES impose a little (I mean little) imposition is getting rid of the capital gains tax discount. But that ONLY applies when you sell a property. Howard introduced a 50% discount for investors (which mean half of the profit they made on selling a house wasn't taxed) which again, incentivized investors to buy up any affordable house they could get and drive the market up to make a profit. Capital gains is how much an asset appreciates in value.

But the new arrangement is a minimum 30% minimum tax rate on capital gains (except if you make a loss you get an offset). They also only apply to gains accrued after 1 July 2027 so like... if a boomer wants to minimise their tax they can just sell an investment property within the next year and a bit and they'll be fucking fine. They'll make hundreds of thousands of dollars in profit for any house they've owned for more than a few years and only be partially taxed on that and they'll be RICH.

30% is the 2nd lowest tax bracket for income by the way. So the sale of a house that's really appreciated in value can still be taxed less than income.

Oh, plus calculating the capital gains is indexed to inflation, which is complicated (click here for examples that illustrate what that means) but basically you're taxed on real gains, therefore the higher inflation is the less those capital gains are taxable.

So really - why do all the boomers care? They already got free education. They already got to buy up houses back when they were cheap. They're still benefiting off grandfathered tax subsidies and the new arrangements simply encourage new houses to be built and tax people a little bit more when they sell an incredibly profitable asset. It's a win-win. Any criticisms that it impacts investors terribly is false. It's a nonsense lie aimed at people too busy or disinterested in actually reading any of the details of the reforms and that's what the Coalition is relying on. It can only win votes off the uninformed so wants people angry over literally nothing.

Capital gains tax doesn't apply to your residential home by the way. So it literally just impacts investment properties - not the house you live in if you're a homeowner.

But the aim isn't to get rid of investors entirely. The point is to just stop making it SO unbelievably profitable and lucrative that investors buy up TOO MANY houses and make it too competitive for people who actually need homes to live in. It encourages them to invest elsewhere (like in stocks to boost productivity) Investors decrease supply and drive prices up. This is not an instant fix. This is a long term structural reform to slow housing price growth and gradually make it easier for home owners to buy a house.

So why is the Coalition making such a big fuss about it and misrepresenting it? Because they want to redirect the conversation away from real structural reform for housing policy (which they have no real solutions for) to turn the national conversation into a racist cesspit of scapegoating immigrants and trying to win votes back off One Nation. They have no good policies so they might as well lie and hope that ignorance and hate return them to office.