Coalition launches suprise negative gearing crackdown

The Morrison Government has already baulked on its election commitment not to touch rules around negative gearing, introducing a $50 million plan to end tax deductions related to vacant land. From The AFR:

New legislation to deny deductions for any losses or outgoings incurred through undeveloped land has been introduced to Parliament, backdated to July 1.

The under-the-radar change will have a limited impact but property industry sources said they had been caught unprepared for the move which would raise $25 million in the 2020-21 and 2021-22 financial years…

“The measure addresses concerns that some people have been improperly claiming deductions for these costs,” Mr Sukkar said in a statement.

Despite its strong support for the policy, the Coalition Government has been gradually winding back negative gearing. The 2017 Budget limited plant and equipment deductions to actual outlays incurred and disallowed property investors from claiming travel expenses relating to their property:

As shown above, these negative gearing tweaks were forecast to save taxpayers some $800 million over the forward estimates period.

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