MPs race to buy investment property before Labor’s proposed changes

A growing majority of the Canberra ruling class have created investment property portfolios ahead of Labor’s bid to slash tax concessions on real estate by $35 billion.

Exclusive: A growing majority of the Canberra ruling class have created investment property portfolios ahead of Labor’s bid to slash tax concessions on real estate by $35 billion.

News Corp Australia analysis reveals at least 65 per cent of Liberal parliamentarians and 61 per cent of Labor MPs own investment property, compared to 52 per cent for both parties in 2010.

The proportions could be even higher, because many politicians’ official declarations say they have two, three or four “residences”. These would likely be investments for tax purposes.

“A taxpayer can only have, or be treated as having, one main residence for CGT purposes at any point in time,” an Australian Taxation Office spokesman said.

While it is not known if all the pollies’ properties are negatively geared, they are clearly using the concession at a far higher rate than other professions.

For example, just 13 per cent of teachers and 12 per cent of nurses negatively gear.

Neither party would comment on the trends within their own ranks.

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At least 65 per cent of Liberal parliamentarians and 61 per cent of Labor MPs own investment property.

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Leading property investors include assistant treasurer Stuart Robert. The Queenslander has a blind trust which holds seven commercial properties — three in NSW and four in Queensland.

Liberal senator for South Australia Lucy Gichuhi has five in Australia plus a home and two blocks of land in Kenya, where she was born.

Labor’s top investor is also from SA — Adelaide’s Tony Zappia — with five properties, down from seven in 2010.

He declined to say whether he personally disagreed with Labor’s cuts to negative gearing and capital gains tax.

Four Labor MPs have four properties including western Sydney’s Michelle Rowland and north Melbourne’s Maria Vamvakinou.

The most common type of investment holdings are units in Canberra. Some are described as second residences rather than investments.

Many politicians declare rental income on these, which can be from fellow MPs who take a room during sitting weeks. Others permanently lease out their ACT apartments. For example, WA Liberal Rick Wilson rents to the Russian embassy.

Labor Member for Calwell Maria Vamvakinou has four properties. Picture: AAP

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Several parliamentarians have added to their holdings since Labor said it would seek to halve the capital gains tax discount and limit negative gearing to only cover new housing.

The most notable is the proposals’ chief proponent, would-be treasurer Chris Bowen.

He bought a block of land 400m from the beach at Bawley Point in May 2016 — three months after his boss Bill Shorten unveiled the plan to cut back concessions.

In September 2017, Mr Bowen notified he had taken a home loan from Sydney Credit Union and he has since constructed a large, colourful holiday house.

There is no hypocrisy here though, as Labor’s policy has no impact on new builds. Rather, the plan abolishes negative gearing on existing housing bought after January 1, 2020. There is zero effect on anything bought before then.

Mr Shorten does not have an investment property; Prime Minister Scott Morrison and Treasurer Josh Frydenberg don’t either.

Labor has said its cuts will boost the Budget by $2.9 billion over four years to 2022‐23 and by $35.1 billion to 2029‐30.

Labor Leader Bill Shorten does not have an investment property. Picture: Liam Kidston

Its policy documents say the reforms will “support housing construction” and there is strong support from left-leaning think tanks such as the McKell and Grattan institutes along with credible economists.

But other experts say the changes will push up rents and reduce availability.

“It will subtract from supply because the increase in capital gains will be a negative for investors whether you are buying established or new,” UNSW real estate research director Nigel Stapledon told News Corp Australia, who spent 10 years at Treasury under both Labor and Liberal governments.

Dr Stapledon noted Labor’s policy only stopped negative gearing against wage income, not investment income. So the very wealthy would still be able to do it, he said.

“It may be that you could see a situation where the principal people leaving the market because of the negative gearing change would be low to middle-income investors.”

Originally published as MPs race to buy investment property before Labor’s proposed changes