The Investment Shift

If you’ve been following the property market lately, you’ve probably heard plenty of chatter about negative gearing and capital gains tax. For investors across Western Australia, these changes are creating plenty of conversation, but what do they actually mean?  These aren’t WA Government changes. They’re federal tax reforms, so they’ll affect investors right across Australia, including those building their portfolios in Perth and regional WA.

Firstly, before you make any decisions, make sure you speak to your accountant and/or financial advisor to find out how these changes may affect your personal situation.

From what we understand, the biggest shift is around negative gearing. Going forward, the tax benefits will largely be focused on newly built investment properties, rather than established homes. The government’s goal is to encourage more housing construction and increase supply where it’s needed most.

There’s also a shake-up to capital gains tax (CGT). Instead of the long-standing 50% CGT discount for eligible investment properties, future investments will move towards a different calculation based on inflation; alongside a minimum tax rate on capital gains. Existing investments retain transitional protections, so not every property owner will be affected in the same way.

So, what does this mean for WA?

For many investors, it simply shifts the conversation. Rather than asking, “What’s the best tax outcome?” the better question becomes, “What’s the strongest investment?”

Western Australia continues to stand out because of its relatively, strong population growth, tight rental market and ongoing demand for housing. Those fundamentals haven’t changed overnight.  If anything, the new rules place even greater emphasis on building quality assets with long-term growth potential instead of relying on tax incentives to make the numbers work.

For anyone considering their next move, it’s worth taking a step back and looking at the bigger picture. Markets evolve, governments change policy and tax rules come and go but good property fundamentals tend to stand the test of time.