Millions of landlords spared in major budget move

Well, there's been massive speculation and quite a lot of anxiety for landlords.But now the rubber is really hitting the road and we know what the treasurer is going to do.News .com has revealed that it's going to be fully grandfathered.And what that means is if you're a landlord using negative gearing right now, you're not going to be affected.Now, that's about a million Australians.

There's around two million property investors in Australia and about half of them negatively gear.So if you're in the system, you're okay.You can keep negatively gearing for as long as you can negatively gear that property.But if you're not, the door's going to slam shut on election night.So that means that if you want to go and buy an existing property and negatively gear it after election night, you won't be able to do it anymore.What you will be able to do though, is negatively gear a new home or a new build.

So, the government still wants to encourage property investors to go and pump money into increasing supply.So, yes to negative gearing when it comes to new builds and eligible properties, no to negatively gearing going forward if you're a new investor wanting to get into an existing property.You won't be able to do that anymore.Where the changes will affect existing investors is capital gains tax.So, there's going to be a bit of hybrid transition phase with those changes.They're going to move from the current system of capital gains tax discounts to a new system which is basically using inflation as the measure.

But it's really kind of back to the future because they're basically going back to the way negative gearing used to be back in 1999.So I think where the political debate really heads now is all around broken promises.We've already seen this claim surfacing that this is the biggest broken promise since Julia Gillard said there would be no carbon tax under a government I lead.

There will be no carbon tax under the government I lead.We need to price carbon.Pricing carbon is the right thing to do.And I said that during the election campaign.

No, you did not.

And you can see the clips are already starting to run of what Anthony Albanese had to say about this before the election.

Do you rule out changes to negative gearing if elected?Yes or no?

Andrew, you asked me that before 2022, with respect.I'm sure you asked me because I was asked lots of times.I told people we wouldn't make changes.The proof's in the pudding, Andrew.

Can you rule out any changes to negative gearing and capital gains tax?Yes.How hard is it for the 50th time?

Now, that theme of broken promises is being run hard already, even though the Treasurer hasn't formally confirmed exactly what's in the budget.He was under the pump on Sky News on Sunday about whether this was a broken promise and how they were going to explain it to the public.

Now, it's my clear understanding you will be dropping negative gearing for existing properties going forward and you will be dropping the capital gains tax discount for transactions going forward.Do you concede that's an egregious broken election promise?

From our point of view, even though the challenges in our housing market begin with housing supply, they don't end there.The status quo in housing and in tax is unfair and unacceptable.and so any responsible government like ours will respond to that.

You'd have to say though that some of the heat is going to come out of this debate because of the grandfathering arrangement.Not all, there will obviously be winners and losers in this budget and there'll also be some other big changes as well to family trusts, And we can expect some sweetness as well.So some sort of handout to make tax a little bit better.There's been speculation about tax offsets.We'll see it in the budget.But what we can confirm is negative gearing is gone as we know it, but it will remain for new homes.

Capital gains tax discountchanges are coming and also changes to trust.So they're the big three and the political debate will now rage.