Canna Campbell

So negative gearing is essentially where holding an investment asset costs you.

So say I go and buy a million dollar investment property and I receive say $50,000 a year in rent, but I'm paying out $70,000 a year in interest.

is technically costing me $20,000.

Now, previously, you know, if I had bought that property prior to budget night, I'd be able to claim the $20,000 off my tax as a deduction.

Going forward, if I bought that after budget night, I wouldn't be able to claim that off my tax, assuming it's not a new build.

And even going forward with the new builds, it's actually quarantined to the rental income, so you can only actually offset that negative income

like cash flow negative against other rental income.

You can't use it to take off as a deduction off, say, your salary.

So it's a significant change in the landscape and also the terms and conditions of the game.

And that's really important because I think a lot of headlines obviously are confusing people.

So I've even had people reach out to me and say, oh, do I need to sell my negatively geared property right now because of these rules?

I'm like, well, hang on, obviously not advice, but you can still keep going with what you've got in place prior to budget night.

So people do need to understand how these rules impact them.

And some people it doesn't impact them at all.

Yep.

New build.

So, you know, a new apartment, a new townhouse, you know, a new house.

So it's a really interesting time because you think, well,

When I look at something that's brand new, it's often really, really expensive.

And this is what worries me, is that perhaps people are going to be overpaying just to be able to access that negative gearing benefit, which is the worst reason to make an investment decision purely based on the tax.