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Tax Cuts will Help Property Investors

The Howard government’s proposed $34bn package of tax cuts is likely to benefit low income earners looking to get a head start entering the housing market.

The Real Estate Institute of Australia (REIA) says this extra cash in pocket can be contributed towards extra or higher mortgage repayments to reduce the principal, thus enabling buyers to pay off their mortgage sooner. Alternatively, the money can be funnelled into a high interest savings account for use towards a future investment deposit. A negatively-geared investment property will slice off even more taxable income, resulting in buyers being liable for less tax.

Whilst many experts believe the tax cuts may boost household spending that could result in higher inflation numbers, the REIA says the phased approach to tax cuts will save homebuyers and investors money by minimising the risk of interest rate pressure, thereby keeping mortgage repayments at bay.