COMMENT: Ring-fencing impact likely to be limited

From April 1st the tax ring-fence for rental property losses needs to be accounted for by investors. It is currently going through the ‘bill to law’ process, which starts with a Select Committee and then ends up before Parliament for the final stage.

In other words, although it’s not law just yet, it looks pretty likely to pass and once approved will apply to the current tax year (ending March 31st, 2020).

After a lot of discussions and a long build-up, it means that mortgaged landlords will no longer be able to use a loss on a rental property to reduce the tax bill on their non-property income(s). There’s been much teeth-gnashing about the potential effect and certainly some individual landlords will have to look at their sums.

As it happens, Australia is paying similar attention to their negative gearing regime, with much of the commentary there focusing on how it’s only utilised because of the concurrent existence of big capital gains. Without those gains, reliance on negative gearing looks less appealing.