An Indian real estate investor who owns 62 properties in Australia has said he plans to add to his portfolio despite the government’s recent changes to tax breaks.
Bharat Patel, who came to Australia to study IT and obtained permanent residency with wife Vaishali before buying their first home in 2010, said the couple have bought 26 properties in the past two years and that they would continue to buy.
In this month’s Federal Budget the Albanese government scrapped the current 50% capital gains tax discount, and altered rules on negative gearing – which allows investors to deduct rental losses from their taxable income – so it only applies to new properties, with existing negatively geared properties unaffected.
Some analysts have predicted the changes will result in house prices falling by up to 10%, but Mr Patel said he was undeterred and viewed the situation as an opportunity to accumulate more properties.
“I will not slow down – I will simply change my plan of attack. Many investors may start offloading properties due to CGT concerns, but for me, that creates opportunities to accelerate,” he told The Courier Mail.
“Right now, my focus is on bulk deals with larger land components so I can add development potential as well. In my own development projects on existing properties, I can add new homes and still claim negative gearing.”
Mr Patel said he and his wife purchased an office property for his real estate business just hours after the Budget was delivered, and said he believed investors would be able to use negative gearing losses to their advantage long-term.
“I am now helping investors use different ownership structures to strategically build their portfolios. A property that may be negatively geared by $5k–$7k during rising interest rates can become neutral or even slightly positively geared within a few years as rents increase over time,” he said.
“In reality, it’s not only about claiming deductions against your wages each year – there can also be long-term tax benefits later on.”
He also said he did not plan to sell ant of his properties, and predicted that the Budget changes would result in investors raising rents.
“In 1987, rents increased significantly after CGT reforms, and I believe history will repeat itself again,” Mr Patel said.
Mr Patel previously told news.com.au he arrived in Australia to do a masters in IT at the University of Technology Sydney in 2005, and in 2010 he and Vaishali bought their first home, a $322,000 two-bedroom house in Doonside, western Sydney, after putting down a 20% deposit.
The couple bought again in 2015, and had 10 properties by the time Covid hit, and then went on a buying spree, purchasing 10 more homes around Australia during the pandemic.
Header image: Left, Bharat and Vaishali Patel (Facebook). Right, a property they bought in South Australia for $174,000 (REA).
The post Indian immigrant with 62 properties plans to buy more despite tax changes first appeared on The Noticer.
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