Transcript

So let's just run through some of those changes that happened. Negative gearing, existing owners will be grandfathered, which is something that was talked all about in between. So anyone who's already bought something and already claiming negative gearing deductions, exchanged it before last night to buy that, then you fall under the existing rules. So you will continue to go along and claim your deductions and your losses against other properties for as long as you own that property. So nothing changes for anything that we've bought. So people that are talking to us at the moment are all talking about properties they've already bought. So there's no change in any way to what the depreciation does or how we do it or what it's used for.

From last night's budget, anyone that buys something, you'll still be able to take advantage of losses against your property or negatively geared property until the 30th of June 2027. So for 12 months. And after that, there'll be no further negative gearing against your property if it's a negative property.

Self-managed super funds are exempt.

Commercial property exempt. I've had a few questions about that this morning. So no changes to if it's a negatively gear commercial property.

Shares, other asset classes are unaffected. So negative gearing can still be used on basically all the other asset classes except for secondhand residential property.

New builds will still retain the negative gearing ability, full negative gearing, a knockdown rebuild will not apply. So if you buy an old house, and by the way, these are the announcements. Obviously there will be the details sometimes of what actually passes legislation as well and gets to that point and sometimes these things change between the drafts and the finals, but at this stage, if you knock down and rebuild a house, you're not adding to the supply of housing. So you are not allowed to negative gear that. If you do add to the supply by building a duplex on that same site, then negative gearing will apply to you as the way we read it at this stage.

Depreciation and other deductions. If they are a loss-making situation, for the claims being depreciation or other things against your rental income that normally would now be able to be negatively geared, will be quarantined against future rental income or residential capital gains. So you can't use it against your other income anymore for these people from that 1st of July 2027, but you can use those against future gains. Now, normally when you're buying investment properties, negative gearings you would hope is a point in time that at some point it does become a cash flow positive property. And if that is the case, then you're still able to carry forward these deductions against that income when it does become positive and then be able to use it against capital gains or otherwise.

Capital gains tax, the 50% discount will be replaced with the cost based indexation based on CPI for all assets purchased after this budget. So from today until and as of 1 July 2027. And this applies to all properties that are even owned already. You will fit into the 50% CGT exemption up until that date. And even if you bought prior to 1985 and you do have no CGT, you will start incurring CGT or capital gains tax from 1 July 2027 under indexation method. So you retain under existing rules when you bought, but then you will swap across to that indexation method under, at the moment they're saying ATO guidance on valuation at the time in 2027. Not sure how that will work just yet, but that will change. Now, the thing that's carved out here is that new builds are exempt from this change, and you will still be able to take advantage of that 50% discount on the capital gains tax when you do sell a property, or you have the choice to take the indexation method, which is going back in 1999, I think it was introduced, where it actually calculates based on indexed inflation over time.

So depreciation in relation to that capital gains tax, depreciation records, if you can't claim them, will be used to help correct the capital gain when it's sold, from what we understand at this stage. So those non-cash losses that happen over that time, there's a later period where if you do sell that property and there's a capital gain, then a change to your cost base based on the claims that you couldn't make through depreciation or other things would adjust that cost base as the way we understand and read it at the moment.