<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The government's proposed tax reform could kill rentvesting for younger generations, an expert has warned.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Renvesting is a popular strategy typically used by younger people to rent in an area that suits their lifestyle while owning an investment property in a cheaper area.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>But last week's changes to the capital gains tax discount and negative gearing will likely shift people away from rentvesting, according to Australian Property Institute chief economist Dr Sherman Chan.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/negative-gearing-loophole-for-millions-of-owner-occupiers-could-discourage-selling/f5adfe31-3500-474b-a6e7-8d50a4023a79" rel="" target="_blank" title=""><strong><span>'Loophole' will allow millions of homeowners to negatively gear after July 2027</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"As with all forms of property investment, people will now think twice before getting into rentvesting," she said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Chan said the rentvesting strategy will soon end up costing people more as investors lose profit to higher taxes, and the expected decrease in investment properties puts upward pressure on rents.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Overall, the appeal of the rentvesting strategy will be greatly reduced from a return-on-investment perspective," she said. </span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/national/rentvesting-tax-reform-to-push-people-away-from-popular-strategy/59229608-0e12-4a62-8aad-47806eb678bc" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Under the proposed new rules, negative gearing will no longer be applied to homes purchased after 7.30pm on May 12.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The capital gains tax discount on properties bought after that same time will also be adjusted to inflation and then subjected to a less generous 30 per cent minimum rate.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>While Treasury forecasts these changes will help 75,000 people over 10 years into the housing market, it also expects 35,000 fewer new homes to be built in that time.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Purchases of new builds are exempt from both policies.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE: </span></strong><a href="https://www.9news.com.au/national/economy-casual-work-booms-fulltime-jobs-fall-as-economy-squeezed/88b61033-2027-4110-9482-b0d250c45fb7" rel="" target="_blank" title=""><strong><span>Casual work booms, full-time jobs fall as economy squeezed</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Chan said the changes are to encourage investors towards new builds, boosting supply, and first-home buyers into existing homes. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The government has fielded questions about how its changes, which have not yet passed parliament, will affect rentvestors.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Treasurer Jim Chalmers told the ABC yesterday that rentvestors can continue to access the generous tax benefits on a home they already own or if they purchase a new build.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>He added that the changes would only affect a small number of young people who have negatively geared a property.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"The closest we get to an accurate number here is about 5 per cent of people under 35 have got rental income, but that includes owner‑occupiers, it includes people who are positively and negatively geared," he said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"So, well under 5 per cent of people under 35 are doing this.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"They can continue to do this if they invest in a new build, and they can continue to do it if they already own that home before budget night."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><em><span>NEVER MISS A STORY:</span></em></strong><span> </span><strong><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><strong><em><span>Download the 9NEWS App here via</span></em></strong><span> </span><a href="https://apps.apple.com/au/app/9news/id1010533727" target="_blank"><strong><em><span>Apple</span></em></strong></a><span> </span><strong><em><span>and</span></em></strong><span> </span><a 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