Labor to scrap negative gearing for new investors by January 2020

Labor would introduce its changes to negative gearing earlier than expected if it wins the May election.

Labor will scrap negative gearing from January 1, 2020 if it wins the election. Source: AAP

Federal Labor will introduce changes to negative gearing and capital gains tax by January 1 next year if the party wins the May election.

The negative gearing changes mean that new investors won't be able to deduct rental losses from their taxable income, but the changes won't apply to newly-built homes and existing investment properties.

While some analysts had predicted the negative gearing changes would remain in place for longer, Shadow treasurer Chris Bowen said the start of 2020 was a sensible time to introduce the changes. 

Chris Bowen says there will still be time for consultation on its planned changes to negative gearing. Source: AAP

"This allows it to come in at a quieter time in the property cycle - obviously Christmas and New Year being a quieter time - a good smooth time for implementation," Mr Bowen told the ABC. 

Labor's housing policy is designed to make it easier for first home buyers to enter the property market. 

The capital gains tax discount will be halved for investments entered into after January 1.

Mr Bowen says the property tax changes will raise $2.9 billion over the forward estimates.

"If you already use negative gearing, nothing changes. It's not retrospective. And you can still use it for new houses," he said in a statement on Friday.

"Federal Labor's plan is good for the budget, good for housing construction jobs and fair for first home buyers."

Labor also announced it would cut the managed investment trust withholding rate in half, from 30 per cent to 15 per cent, to encourage new housing.