You might already know if the labour wins the next elections and comes to power, they are proposing to bring changes to negative gearing. One of which is the negative gearing applies to only new properties. I am someone who bought an apartment as my first property (because I am unable to afford a house, but I wish to move to a house) with the view that I can buy another property after a few years, move into it making the current one I am living into an investment property. I am confused as to what happens to my scenario when the new proposed negative gearing policy comes into place? I did not find much information related to this online. Can someone throw light on this? Thank you.
Change Current Owner Occupied Property into Investment Property after Labor's Proposed Negative Gearing Changes
usbc activist on 29/08/2018 - 12:01
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What if the goal is to help EVERYBODY? Why should people be punished for earning more money?
If we drop tax rates it helps some, but will require higher taxes on others, or decreased spending on services. So the argument is how to collect taxes with the least discomfort to the taxed. High income earners and the wealthy can afford to pay more tax than the poor. Low income earners routinely have no option to be high income earners, but all the high earners can choose to be low if the tax burden is truly unfair.Have you any citations for:
"And secondly it's a well known fact that when people have more money they will spend more money. " because except for people on below median income, the opposite is true. The wealthy hoard (invest) their money. I think at best it is contentious, but in the case of tax cuts that are disproportionately directed to the wealthy it is a negative:
https://www.forbes.com/sites/johntamny/2015/03/14/what-would…And:
"When direct taxes are reduced, governments end up actually taking in more tax receipts."
I think this was the core conceit of trickle down economics and even Donal Trumps tax cuts. I think it is pretty thoroughly discredited:
https://en.wikipedia.org/wiki/Laffer_curve#Empirical_data
Making interest on the family home tax deductible would send house prices even higher. The tax-adjusted lower repayments would see people pay more for the same property than they otherwise would under the existing system. So everybody who already has a house gets to benefit, and everybody else gets to spend even more time saving for an even larger deposit with higher house prices eroding all those tax deductions anyway. The only way to make housing more affordable is to make house prices lower relative to income. Anything else either does nothing, or makes debt more affordable, which in turn makes house prices higher.
@EightImmortals: it would make property even more expensive, as your tax deductions would be priced into the asset value. Throwing more deductions at a price bubble WILL NOT make it more affordable.
@kostanza: Possibly, but then around 50% of the cost of a new house (depending on which state you live)goes on tax too. So how about we keep the government thieving mitts out of it which would half the cost of a new home, allow tax deductions for interest on the family home, and only the family home, (and only on the principle mortgage of course, not on redrawn funds)and watch as housing becomes affordable again.
Letting people buy properties with Super just means that at the age of pension, people won't have any income, yes a house, but no income.
That will force the same people to reverse mortgage their house, and if they live too long, be vacated from their homes.
Big winner in this: BANKS
T&C for reverse mortgages state when a default event occurs and it's not because the loan exceeds the value of the house - in most cases a reverse mortgage default arises if the person is no longer occupying the house ie moved in with kids, gone to a nursing home, died etc. LVRs are pretty low for these loans and you would have to have persistent low growth or deflation in house prices over many many years before there's any chance of the loan amount exceeding the house value. And if that happens, banks will be the losers, not the winners, because these loans are non-recourse ie the bank can only claim back whatever is raised by sale of the house. When the owner moves out, if it sells for less than the loan, bad luck bank.
I do agree that super should not be used for house purchase. The pension may not be available when those entering the workforce today are ready to retire.
Negative gearing is a term for renting out an investment property for less than what i costs to pay the mortgage and expenses.
Investing in loss making things is obviously a terrible idea.
But, because Australia taxes CGT at a 50% discount to income, even loss making investments can be worthwhile if the value of the property has grown.While I don't think the full details of Labor's policy have been released, in your circumstances it probably isn't a huge issue.
- If your existing property is still losing a meaningful amount of money when you move into a new one, it would be a surprise if you could afford to keep it along with a new mortgage. If it is breaking even or making a profit, negative gearing doesn't apply to you.
- As a society, we shouldn't run a distorting tax system that encourages investment in loss making schemes in the hope of avoiding tax by channeling it to capital gains.
- Property price rises look to be much more subdued for the foreseeable future, so negative gearing for everyone is much less attractive.In the usa you can tax deduct interest for your main property even if you live in it, which we do not have here, negative gearing is our version of that, if they proposed to remove that tax deductibility in the USA the property market would crash overnight there.
This is not relevant. In the US they also have property taxes directly funding government services and education. That doesn't make our system better or worse. The evidence that removing negative gearing here on future sales of existing property will 'crash' the market is lacking. If the market is so primed for a crash maybe it is a risky place to invest? Do you want tax breaks for bitcoin too, because it is risky?
Do you want tax breaks for bitcoin too, because it is risky?
Negative gearing isn't a "tax break" - it's the application of the universal taxation concept that losses are offset against gains before you're taxed. Removing negative gearing would be actual departure from standard practice. And losses in crytocurrency investments can already be offset against other capital gains.
The evidence that removing negative gearing here on future sales of existing property will 'crash' the market is lacking.
I'd rather not have that crash, than be able to say "told you so" after it crashes.
By all means keep the universal concept of offsetting losses before tax, just restrict it to investment income and losses, as Labor is proposing.
Or tax capital gains at full marginal rates.
It is the gaming of the system to claim losses against full marginal rates and gains at a 50% discount to marginal rates that is the distortion, as you well know.By all means keep the universal concept of offsetting losses before tax, just restrict it to investment income and losses, as Labor is proposing.
Are you under the impression that interest expense isn't an income-related expense? Rental income is treated as part of total taxable income. To try and exempt rental losses (which include interest expenses on rental properties) from total taxable income would again be departing from standard practice.
(Edit:) And trust Labor to want to complicate the tax system even further by separating out investment income from normal income, and all the bureaucratic headaches that'll come with trying to define the two and where the line is, enforcing the difference when in 90% of cases it'll make zero actual difference, etc. (/edit)
Or tax capital gains at full marginal rates.
Almost all tax systems have a lower capital gains tax rate, because economists understand that encouraging capital investment is a useful thing.
It is the gaming of the system to claim losses against full marginal rates and gains at a 50% discount to marginal rates that is the distortion, as you well know.
No, this is the system working as intended. It encourages people to take on upfront losses in order to sink money into capital investment. Again, capital investment is a good thing, or have you lost sight of the huge housing shortages in the major cities?
You don't like how it works, for whatever reason. Your reasons are invalid from a broader economic perspective (according to our understanding of economics - because again, almost every tax system has lower rates of tax on capital gains than on income). Yes - negative gearing benefits the rich more than it does the poor. Guess why? Because it's the rich who have money to invest in housing and therefore increase housing stock.
capital investment is a good thing, or have you lost sight of the huge housing shortages in the major cities?
Capital investment in new housing is a good thing. Which should become more attractive under Labor because new properties will still be allowed to be negatively geared while existing properties will not. Allowing negative gearing on existing properties does nothing to increase housing stock.
@dazweeja: That part was addressing the fact that capital gains are taxed at a lower rate than income.
Negative gearing has nothing to do with capital gains being taxed at a lower rate, it's an application of "tax is levied on income less expenses".
How does giving a tax break on existing houses cause them to be built again?
The Labor policy keeps negative gearing for new construction.There is no circumstance where giving a tax break as a reward for somebody parking their money in a loss making existing house is beneficial to society. If they chose to invest in a new build instead, it would boost the housing stock you are concerned with, and employ construction workers etc. If they shun existing property, then prices will be lower for first time home buyers, with which investors compete.
In every other country except NZ, the losses early in a business or other investment can be offset against future investment income. Do the same here and it will be a level playing field as it is only income after those losses are extinguished that is taxed.
A tax system that encourages loss making ventures because the losses are off-set against personal income taxed at a higher rate distorts investment away from beneficial capital investment toward speculation. Speculation does nothing to grow the overall pool of wealth.
I don't like how it works because the current tax system encourages speculation that drives up the costs of real estate. Higher real estate costs are bad for the community, as they impoverish future generations who currently hold no real estate, but will still need a place to live.
I am in favour of tilting the board toward new construction where there are housing shortages, as negative gearing on new builds does. And I am in favour of tilting the board toward productive investment, as a lower capital gain tax rate does (though I am not especially convinced about this one, as I suspect there would still be plenty of investment without the tax break).
But the current combination that drives people to invest in loss making existing dwellings, that have values unhinged from their return, is an accident waiting to happen and harming those not yet owning property.How does giving a tax break on existing houses cause them to be built again?
Because it incentivises buying property, which increases demand for property, which maintains property prices. Higher property prices - better returns for developers looking to construct.
There is no circumstance where giving a tax break as a reward for somebody parking their money in a loss making existing house is beneficial to society.
The family renting the property might disagree.
If they chose to invest in a new build instead, it would boost the housing stock you are concerned with, and employ construction workers etc. If they shun existing property, then prices will be lower for first time home buyers, with which investors compete.
There's no way to so cleanly bifurcate the property market like you're imagining here. Either homebuyers are buying existing property, in which case there's no extra incentive to drive construction, or they're still competing only for new properties (which being less in supply) means prices for those will skyrocket.
You don't get "affordable homes for home buyers" and "incentivize new home construction". They're literally diametrically opposed goals, because the first needs low prices, and the latter needs higher prices.
A tax system that encourages loss making ventures because the losses are off-set against personal income taxed at a higher rate distorts investment away from beneficial capital investment toward speculation.
This is nothing unique to property. Especially in recent years. Have you looked at start-ups? Loss-making until they're bought out for a huge price (aka capital gains). It's exactly the same. And those losses are absolutely offset against the income of the people making the loss - it just tends to be a company and not an individual.
Nothing you've said justifies treating property investment income (and expenses) differently from say, investing in stocks, or a business, or anything else. All those expenses are offset against income, all income, not just investment income.
@HighAndDry: "Nothing you've said justifies treating property investment income (and expenses) differently from say, investing in stocks, or a business, or anything else. All those expenses are offset against income, all income, not just investment income."
Well…. if you sell shares at a loss, you cannot offset that loss against regular income, only against future capital gains. Neg gearing (the abolishment thereof) would work in a similar way with losses to be carried forward and offset against future profits.@HighAndDry: the undersupply of housing is due to land release and unit development approvals, not a lack of investors. The price of land will reflect the difference someone is willing to pay for a house minus the construction cost. Literally every single tax deduction is priced into the land increading the cost of housing and causing massive distortion in our financial system. We wouldn't have so much housing debt if there weren't so many tax deductions for housing.
Bingo. All an 'investor' buying an existing property does it turn a potential home owner into a renter.
By all means subsidise investment in new supply, but don't pretend that investors selling existing housing to each other does anything to increase the housing stock.
Do you want tax breaks for bitcoin too, because it is risky?
My Wife is a tax accountant. They have had a few customers trying to claim losses in bitcoin value. I bet none would have opened their mouths if they made a windfall though, lol.
Well it is capital loss, so if you have capital gain to offset against, then why not lol.
Yep this, if they are going to tax gains then losses should be a write off.
As others have said, you can use losses in Bitcoin to offset other capital gains.
Do you want tax breaks for bitcoin too
Yes please :)
If negative gearing is removed it would be the dumbest thing the government could possibly do for the economy.
It would probably hurt long term renters the most because investors would either be looking to recoup losses by rising rent or reluctant to invest in property from the get go - in the long run reducing supply.
Im moving away from property looking to off load my last rental because it has simply become too risky. Prices are stable if not dropping, tenants have more rights then landlords, agents are useless and the costs all fall on the landlord to pick up when things go ballz up.
I'd have to say investing in property is becoming too risky. Maybe land might be a better investment but it lacks the tax benefits and brings in no income.
Yes there is insurance but once you take excess into account more things arent worth fixing with insurance - the fact is property without a tax benefit would be a bad investment if it isnt already
It would probably hurt long term renters the most because investors would either be looking to recoup losses by rising rent
Rent is currently at the maximum level that renters are willing to pay. That's how supply and demand works. If landlords could charge more and still rent their place, why wouldn't they do this now? Everyone likes money.
in the long run reducing supply.
Negative gearing still applies to those properties that increase supply, ie. new properties. So new properties should become more attractive to investors compared to existing properties. That should increase supply, not reduce it.
Im moving away from property
That is the aim of the policy. Less investors, more homeowners.
Where are the rental properties coming from
Lol, where are the renters coming from if there are more homeowners? If someone can own their home, they don't need to rent.
@dazweeja: People who can't afford to buy, like students, newlyweds, the poor. Just because there are more homes doesn't mean the housing market has crashed - it'll be the opposite. And some people just plain won't be able to afford a property without the housing market crashing about 50% of its value.
Someone moving from being a renter to a homeowner does not affect the number of rentals that are available to students, newlyweds, the poor. The only thing that could affect that are empty houses, or less houses overall. In Victoria at least, they are increasing taxes on empty houses to avoid the first problem, and increasing the attractiveness of investment in new properties as opposed to existing properties should mean more houses overall.
Someone moving from being a renter to a homeowner does not affect the number of rentals that are available to students, newlyweds, the poor
Yes, but less properties owned by investors (aka landlords) will.
and increasing the attractiveness of investment in new properties as opposed to existing properties should mean more houses overall.
Just because buyers want new properties doesn't mean they'll automatically get built - you'll need those new properties to be selling for more than existing properties, because otherwise why would anyone build it if it won't sell for a good price?
Yes, but less properties owned by investors (aka landlords) will.
No. Because less properties owned by landlords, means more homeowners, which means less renters. The only way your logic makes sense is if existing homes become empty. Otherwise, there is the same number of people and the same number of homes, but some people have moved from the group 'renters' to the group 'homeowners', and likewise a similar number of properties have moved from the group 'investment' to the group 'owner-occupier'. That's just of course existing properties - we still need new properties to be built and this policy at best encourages that, at least has no effect.
Otherwise, there is the same number of people and the same number of homes
You realise that people enter the rental market right? Like people who get older and move out of home, that kind of thing?
You realise that people enter the rental market right? Like people who get older and move out of home, that kind of thing?
If they're moving out of home into an existing property, it will have the same effect on the rental market whether they buy a home or rent a home. In both cases, they are occupying that house and there's one less house for everyone else. The solution is to build more houses, which Labor's policy encourages.
@dazweeja: No, if they're renting, they're increasing rental demand and therefore rental prices. If they're buying, they're increasing property prices. The two aren't remotely the same thing unless you're looking at it from the Moon. What are you smoking?
And Labor's policy doesn't encourage building new properties, it encourages some people to buy new properties, but it only acts as an incentive if it drives up the price of those new properties. Stop gobbling up political rhetoric as if it were f***ing gospel.
Developers aren't building if they can't get returns, and in this banking/lending market, those returns are going to have to be high.
Rent is currently at the maximum level that renters are willing to pay. That's how supply and demand works. If landlords could charge more and still rent their place, why wouldn't they do this now? Everyone likes money.
That is not true. It is the minimum level that renters can get what they want. If ALL properties' rent go up 10% tenants will be forced to pay more.
That is the aim of the policy. Less investors, more homeowners.
Homeowners don't pay Land Tax so this will result in a massive decrease in tax collected by state governments
That is not true. It is the minimum level that renters can get what they want. If ALL properties' rent go up 10% tenants will be forced to pay more.
So why haven't they gone up already if people will pay it? Are ALL landlords giving everyone a 10% discount out of the goodness of their own hearts?
It is true. Demand for rental property is what economists call demand elastic, which means that as the price rises demand falls (because people delay starting families, moving out of home, move in to share houses etc.).
If the rental price for all properties goes up 10%, then other things equal, there will be less demand for rentals, and a bunch of empty rental properties. Those investors with empty properties will start dropping rents, bringing new renters into the market, until such point as supply meets demand. This is why rents have crashed in places like Darwin and Perth - demand dried up when the mining boom went bust, forcing landlords to drop their prices.
This is all very, very basic economics.
@doheedo: Because not all landlords are upping their rent. If all do at the same time because of an external event then the tenant has no other options.
It was like when the 10% GST was introduced, prices went up 10%, you are saying that every seller took a 10% hit on profit - that is nonsense.
@arescarti42: While I agree with the economic principle. I would argue that rentals are about as inelastic as it get, while still being a bit elastic. Yes people might delay moving out of home etc but they are small minority, most people need a place to live - they can't choose not to have a place to rent, thus if rents increase across the board they have no choice to pay the increased rent.
Still dodging the question. Why are not all landlords upping rents if they can?
@doheedo: My god, you can't be serious. Why are not all landlords upping rents if they can? The answer is they can't because of competition between the landlords for tenants - can you seriously be asking this question.
But if a fixed cost is put on ALL the landlords equally, they will ALL increase the rent to recover that fixed cost.
It's not dodging the question - the answer is so obvious.
All your points are wrong
that money doesn't go to 'new home owners' it just ends up in builders pockets they just inflate costs it is exactly what has happened once they got rid of stamp duty for new properties in pretty much the cost of all properties under the thresh hold jumped by 10-20k over night
Majority of property investors are middle income earners and not multi-millionaires all you are going to do it take money from average ppl and give it to rich which will result in higher cost for everyone.
People dont realise because it is a private industry but a public issue any changes to the current system will result in negative impacts on our economy
As for renters owning properties this might happen but there will always be a 20-25% of the population that rents doesnt matter how affordable housing is some people like to rent
If government really wanted to help housing they would remove stamp duty and enforce greater land taxes with harsh penalties on those who own multiple properties.
Even if Labour wins, they won't let the property market go cold.
Labour plays heavily on identity politics - "working class power" and all that crap. They'll try their best to look like they're doing something but like all policies based on propping up dying ideas or "redistribution" of wealth, they're going to run low on funds.
Money has to come from somewhere.
If the property market goes cold, the lost revenue of foreign investments and stamp duties is going to be a harsh wake-up call.
Labour plays heavily on identity politics - "working class power"
You mean John Howard’s “Battlers”?
Can't imagine Labour fiddling much with Negative gearing. How many pollies from any side have investment properties ? In a two horse race always back the horse named Self Interest.
http://www.abc.net.au/news/2017-04-20/australian-politician-…
http://www.abc.net.au/news/2017-04-20/housing-affordability-…Skewed heavily towards libs, but quite a number of ALP and greens do to.
I don't understand why negative gearing is such a touchy subject.
For every investment, deductions reduce tax payable on income. Normally losses have to be carried forward until you make a profit, whereas negative gearing allows deductions against other income (eg wages).
So if negative gearing were scrapped, investors could only reduce investment property income to $0 and the loss would have to accumulated until the property starts making a profit. Inconvenient, but I don't think it alters the equation.
What is unfair is the disqualification of previously allowed deductions. eg only new buildings can be depreciated now. We should be having a class action to sue the government over that one. Since when are investment assets not eligible for depreciation??
The government is certainly trying to make non-new property investment unattractive.Until now I believe landlords have been providing affordable accommodation to renters. I think that is over. Landlord's will either leave the market or push up rents. Either way, it's not good news for renters. The government will probably have to subsidise rents - or go back to encouraging investment.
Neg Gearing helps offset operating losses which cannot be carried forward, unlike capital losses which can.
These tax changes don't effect existing investors, so it's hardly unfair and certainly wouldn't support a class action. The fed govt is responsible for tax policy, and they can and do change policy.
I doubt the changes will have much effect on rent, which is set by supply and demand. There may be a slow reduction in rental properties as they shift to home owners, but newly constructed property still qualifies for neg gearing … this may encourage construction and could slow rental increases (marginally). Investors getting overly excited need to get a grip on realtyall losses can be carried forward, negative gearing simply allows them to be offset against other income now instead.
These new changes might not affect existing investors, but the previous one I mentioned (no depreciation on existing home and contents) did, which is the one I'm saying is not right.
Supply will be affected if landlord's exit. I wonder what portion of renters would rather have a mortgage. I guess increased rents might increase that portion. I think it wouldn't be good for those who prefer to rent.
I think anti-property-investors are the ones who need to get a grip.
Wow, and no wonder we have a property market bubble. People don't even understand how the tax strategies work.
How can you go through life without understanding the biggest purchase of your life?
By doing it for social status.
Or to "get one up" on the tax man.
A House should first and foremost be available as someones home….and not as a form of investment, There are so many areas of investment, houses / homes shouldnt be one of them, I recently purchased a house so i guess from a personal point of view i dont want property prices to drop but at the same time, majority of people around me and my friends seem to have 2-50 investment properties each…
I think there should at least be a limit and maybe one house to live in and one for investment and even then i am not sure i agree. Because for each extra property one rich person holds, thats one less property a less well off person can afford to buy or call his / her home and instead has to constantly live by paying rent and never owning property or feeling like they can make changes to the place they live in etc….
I am sure there is a market for renters too but the way it currently is its too easy for people who already have money or a couple of properties to keep expanding and getting more…
I can see why you are called "lonewolf"
Do you also propose that the number of shares one holds should be limited and the amount of money one has in a bank account be limited and the amount of superannuation one can have is limited?
After all this is exactly what you are suggesting!And what does one do with the excess?
I suppose you suggest they give it to the government to help those less well off.Have you even considered that every investment property is providing a home for someone less well off to rent.
So you want to make it even more difficult for your less well off people to find and afford somewhere to live.
Even Communist China doesnt do this so you are definitely a "lonewolf"
you obviously missed my whole point so you can go off on your rant. I said there are many other areas for investments and basically designed for investments. A house is someones home but anyway no point repeating it as it is all in my original post if you would read it and i know a lot of people who do feel this way as well so i am definitely not alone in that thinking. Things like negative gearing etc should only apply for a set limit otherwise it gets out of control. Soon we will have the 1% owning all the property.
No you missed the point completely and YOU DID NOT MENTION NEGATIVE GEARING EITHER but I wont waste my time with you.
One day you will get it@Amayzingone:
This whole thread was about negative gearing.
Then dont respond, i dont want to get it if i need to think like a selfish person.
FROM AN EXPERT ON PROPERTY EXPENSES AND NEGATIVE GEARING:-
As usual Bill Short-on-facts has not given any details.
One might assume based on history, that existing negative gearing arrangements at time of change will be grand-fathered.
But you never know with old "Snake-Oil" Bill.
Given the lack of detail its impossible to give any advice other than to hope they follow precident and grandfather existing negative gearing arrangements.IMPORTANT: Many people DO NOT UNDERSTAND WHAT NEGATIVE GEARING IS AND WHAT ITS REMOVAL MEANS
Under the Income Tax Assessment Act you DO NOT LOSE THE RIGHT TO CLAIM YOUR PROPERTY EXPENSES AS TAX DEDUCTIONS when negative gearing is removed………
except those expenses that have been removed by legislation: such as plant & equipement depreciation for existing property and travel expenses.
Any excess property expense tax deductions are simply rolled over into the next income tax year (LOSSES CARRIED FORWARD) and continue to do so until they can be offset either against positively geared income or the sale of the property.In OP case:
As I understand it and OP would need to seek his accountant's advice:
The purpose for which the loan was ORIGINALLY taken out is very important regardless if its "called" a home loan or investment loan (this is irrelevent - it only serves for pricing the interest rate).
So if the property is purchased as the residence then the loan is for OP's home and not for an investment property.
Hence interest payments are NOT tax deductible even if OP eventually rents out his home - BEWARE!FROM THE AUSTRALIAN TAX OFFICE
You cannot simply roll expenses over into a year of your choosing. You can claim operating expenses against income in the year they occur, and you can apportion certain capital expenses over a five year period. These capital expenses are limited to:
1. Borrowing expenses (loan establishment, stamp duty, etc)
2. Depreciation of assets
3. Capital works deductionsThis is relevent today as the legislation stands with negative gearing in place. Not as to what OP asks.
I have commented in reply to OPs question about potential removal of negative gearing by Labor.
Can you pls look up tax deductibility of loan where property is rented out at a later date after it was used principal place of residence and purpose of loan was to purchase the principal place of residence (not as an investment)
So if the property is purchased as the residence then the loan is for OP's home and not for an investment property. Hence interest payments are NOT tax deductible even if OP eventually rents out his home - BEWARE!
WRONG. Once it becomes an IP interest will be deductible.
Thanks for your comment. After the negative gearing changes come in, if I buy a house, move into it and want to rent out the current apartment. Will I be able to claim tax deductions for it? I am pretty sure it will not be positively gearing yet.
Very informative, thanks.
Does anyone know if the proposed changes only affect individuals negative gearing properties - ie negative gearing against PAYG income, because you can put the property ownership in a company structure and claim losses against other profit.
As companies do not receive the 50% CGT discount, holding a property in a company is rarely tax effective.
Firstly I highly doubt Labor OR the Coalition would ever mess around with 'negative gearing' because too many people (over 1.2m people make use of this benefit) and it would be a vote killer.
The best, and I seriously mean the best, Labor (or anyone) could ever change is that NG will not be available/applicable to new property acquisitions moving from a certain date - there will be no way they will ever change it to retrospectively owned properties!
because too many people (over 1.2m people make use of this benefit) and it would be a vote killer.
That means there is about 23.8m who don't, not all of them at the voting age but still plenty more than 1.2m.
Labor's plan isn't to apply it retrospectively but the way it will get those is that it will likely stop any net appreciation for the foreseeable future so it will be actual losses people are claiming against, not paper losses offset by appreciation.
Really hoping this gets passed so I can finally afford to buy a house. All out for labor. Greedy investors and foreign chienese property investment has made life hell for hard working middle income families
To a lot of foreigners, oz properties are still cheap, not expensive at all. The so called pop, crash are wishful thinking of the poors. Sure if negative gearing policy is changed there will be a significant impact for a while. But in several years time the market will continue marching higher.
Now we retrospect, for how many years have people been crying about correction, crash blah blah. Those took it seriously have missed the ship, and probably will not be able to get on aboard lifetime. How sad is that!Remove negative gearing
House prices drop
Rents stay the same
Rental yield improves
Foreigners don't pay tax here - could never use negative gearing anyway
Foreigners buy all the homes
Australians learn what its like to live in a poor pacific island country where all the wealth is owned by foreigners
Labour blames Liberals, Liberals blame Labour
Honestly people need to get their head on right.
Buying a house to rent i.e an investment is like running a small business. So why can you deduct the interest? This scheme saves a lot of heart ache where people with this extra disposable income will invest in shares and other dubious investments and risk losing their outlay.Labor doesn't realize if negative gearing is removed I for one will be putting up my rent. So they like to say they are for the mums and dads but most people which negative gear are families and also many families rent will see their rent go up.
Doesn't the market dictate how much rent you can charge? If you could easily choose to put up the rate, why don't you do it now and make more money… then you wouldn't need to be negatively geared.
The market includes all landlords too. Even people who're positively geared deduct rental expenses from income. If that's removed, the take-home from rentals decreases and landlords' total breakeven will likely rise, meaning rents will have to go up to compensate.
And get this: People need places to live more than landlords need money.
You can put up your rent as much as you like. The catch is if anyone be willing to take it at that price. Removing negative gearing will probably push rents lower or keep them stagnant as there will be an excess of properties, lowering their value. You increasing the rent would probably be a lose lose situation for you.
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@mskeggs: That approach relies on a couple of unsustainable (IMO) assumptions. Firstly that more tax taken somehow finds it's way to those who need it the most. It doesn't. It's like trickle down economics, great in theory but the money tends to trickle up in the real world.
"A tax cut helps the rich and struggling indiscriminately. If the goal is to help the struggling, target the help there."
What if the goal is to help EVERYBODY? Why should people be punished for earning more money?
And secondly it's a well known fact that when people have more money they will spend more money. When direct taxes are reduced, governments end up actually taking in more tax receipts. It's a concept that most politicians just can't wrap their brains around (or maybe they do and just want everyone else to be poor and miserable?). So the economy wouldn't suffer and would most likely be better off