As you might know, the Labor Party plans to do away with the tax incentives of negative gearing on existing properties. It seems that people are finally starting to realise the bad side of this strategy.
But if you’re still using it, don’t worry, as you’re not the only one. Many people believe that this is a good idea until they see the potential of a different approach.
So, how can you adapt to Labor’s proposed new legislation?
Here are the best ways of protecting yourself:
- Increase Your Rental Income
According to SQM Research, rental yields will see a 1% increase if the law passes. And that’s a conservative projection. If this happens, you’ll want to make sure to prepare your asset for this.
You can do this through some affordable cosmetic improvements that can have an impact on the rent.
In addition, you might want to think about switching from traditional renting to using a service like Airbnb. This can get you a much higher income than renting to a permanent tenant but do you want all the hassles of meeting people at the door and cleaning up after people.
- Lock in Your Equity Before the Election
Property values will likely go down a bit after the election especially existing properties if Labor wins the vote. This means it’s a good time to make use of your equity. You’d want to increase your loan or line of credit limit to the maximum 80% of your property value.
This will give you some reserve cash in case of emergencies, or you can use it for future investments.
- Change Your Strategy
You know what they say, “Don’t fix what’s not broken”. It’s more than obvious that the days of negative gearing are numbered. The good news is that there are other strategies that can yield better results, and therefore put more cash in your accounts in the long run.
The government is likely to stop rewarding losses, so you’ll want to make sure to switch to the side of income. If they changed policies and promoted the use of our amazing positive cashflow strategy then they would not need to get rid of negative gearing. People would just not use it!
I can show you how it all works and more. Just click here to sign up for our free masterclass.