Labor wants to remove or reduce the capital gains tax and negative gearing concessions on real estate investments, ostensibly to take the heat out of the housing market and to remove the "intergenerational inequality" for young people.
They had only just stoked up the housing market with their 5% Deposit Scheme which was taken up by 243,000 Australians. This is just another tax grab from the few to redistribute to the many to buy their votes.
Although it may go a little towards curing Australians of their obsession with real estate. The tax concessions have lead to an over-investment in houses. On top of this the housing market has been buoyant, leading people to think they have made a "good investment" in their home.
For many people their home, the house or apartment they live in, is the single biggest purchase they make in their life. People tend to keep their home for a long period, sometimes changing and moving as needs and wants change. Quite often the value of their home increases over their life or ownership period. This is often due to inflation, where it just seems to increase in value, but doesn't in real terms. Sometimes supply and demand pushes the price up, or down. Actually, it is mostly the land on which the house sits that increases in price or value; the house itself mostly depreciates with age and declines in value.
(And you pay the only unrealised profit tax in the country every time you pay your council rates which are calculated on regularly increasing land valuations while charging you for services which are the same as those received by your neighbour who may only pay half your rates.)
With the house we live in we mostly have a loan to finance it and we pay it off over a longish period. It is a means of saving - a forced or disciplined saving regime for us. So after ten or fifteen or twenty years our house may be paid off, and when we choose to cash in and sell, it gives a nice lump sum, probably tax-free, that has kept up with inflation, and we can take our nest-egg and perhaps buy something less expensive, with something left over to invest or play with.
Thus it seems like it has been a "good investment", but a house/home is really a "long-term consumer-durable"; it is like a refrigerator or appliance. It will last twenty years or more years and serve us well. It will have running costs, such as rates and taxes, maintenance. It will need to have leaks fixed, plumbing maintained, paint and various repairs over its life. It will depreciate; it will get old and out of date.
Now this is not to say that one should not buy and own a house to live in. Quite the opposite, owning your own home is an attractive and desirable thing to do and most people do it. It can be shelter and accommodation; it can be a source of self-expression with decorating and furnishing. You can alter and change and expand your home when you need or want to. And it is "home". It is more of a "home" when you own it rather than rent it. And there is a sense of pride and satisfaction and security in "owning your own home".
But look upon your home as a long-term-consumer-durable. Own it, pay it off, make it the way you want it, move and swap when you want or need to, and look for other things for your financial investments. Look for investments that will hold their value or increase in value (in real terms) and give a return. A business or shares may do this.
Enjoy your home, and if it does actually give you a financial return when you sell it, look upon that as a bonus.
