I’d like to add to my last post about Commonwealth Bank’s loan applications falling by 15% since May 12.<\/p>\n
CBA is drawing attention to that date because that’s when the federal government announced its budget, containing sweeping changes to Australia’s property taxation rules.<\/p>\n
What were those changes again?<\/p>\n
Just to recap those changes, the government\u00a0is only allowing property investors to negatively gear newly built properties.<\/p>\n
But investors who owned existing properties before\u00a0the budget will still be able to deduct their net rental losses against their wages and other personal income.<\/p>\n
On top of that, the government abolished the 50% capital gains tax discount, replacing it with a discount based on inflation indexation, as existed prior to September 1999.<\/p>\n
It has also introduced a 30% minimum tax rate on net capital gains.<\/p>\n
Those two CGT changes mean a lot of people selling their homes will be paying more tax under the new regime.<\/p>\n
RBA rate hike also a contributing factor<\/p>\n
A lot of people like to complain about the budget, especially investors who stand to lose the most.<\/p>\n
However, there is another reason for the sharp fall in loan applications that CBA is experiencing \u2014 along with its rivals NAB and Westpac.<\/p>\n
It’s because\u00a0the Reserve Bank lifted interest rates by 0.75 percentage points in February, May and March this year.<\/p>\n
Yesterday, when RBA governor Michele Bullock delivered her press conference, following the central bank’s decision to keep rates on hold, she was asked why Australia is experiencing a property downturn.<\/p>\n
As expected, Ms Bullock refused to be drawn on whether the RBA’s rate hikes or government’s budget was the larger cause of property owners’ current predicament.<\/p>\n
She essentially said both were contributing factors and did not go into much further detail.<\/p>\n","protected":false},"excerpt":{"rendered":"I’d like to add to my last post about Commonwealth Bank’s loan applications falling by 15% since May…\n","protected":false},"author":2,"featured_media":852050,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-852049","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/852049","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=852049"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/852049\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/852050"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=852049"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=852049"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=852049"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}