In light of recent media reports regarding potential policy changes to Negative Gearing and Capital Gains Tax (CGT), what is the practical perspective within the OzB community?
Should government reassess property investment and the claims associated with it?
If negative gearing is abolished, rental prices will surely rise as landlords will raise the price to compensate.
Or, they might sell the property (easing the market) and find other financial instruments that they can negatively gear.
The idea in removing NG is that investors will be less likely to invest in housing in order to reduce their tax burden. In this way the heat in the housing market might be lowered.
Those investors surely can choose to negative gear other financial instruments.
I can see how anyone owning a house (not just investors) might not want the heat taken out of the market. These people need to be reminded daily that their attitude is hindering younger generations dream of home ownership.
attitude is hindering younger generations dream of home ownership
I see the young generation attitude now is more into tiktok. Cant see that helping
I see the young generation attitude now is more into tiktok
What do this mean
It’s the belief that younger generations are not deserving of home ownership.
That’s the attitude that perpetuates the inter generational inequity.
@Eeples: I think you'll find social and MS media perpetuate generational divide, including exaggerating inequities.Hard to know where the most maggots reside, between the 2.
As someone whom would traditionally benefit from negative gearing (high taxable income - without any other legitimate way to lower it), I would love if the government abolished negative gearing. That being said, I feel like it should be removed with a commensurate tax reduction for the whole working population.
Negative gearing earns the participant more, or they would not do it.(consistently) Hence the whinging.
It's just another rort.
I hope the govt cuts it off cold turkey. Introduce incentives based on supply only, be it new or freeing up existing stock. Have a limit (time and incentive amount) so it has a limited life aimed at filling demand sooner.Those who lose neg gearing could be encouraged to invest in,and be rewarded for, the new federal govt building plan.
Negative Gearing is a policy failure because of the following reasons. For reference, I own one property, my PPOR, outright.
Over 90% of NG claims are existing builds that have already passed hands at least once prior, not new ones. It is failing to add supply that it purports to.
Rents have been rising well enough on their own. People claiming they will need to raise rents as a threat are happily ignoring the skyrocketing rents already! The market has become too sensitive to rates and your noble "investments" aren't helping. Removing this taxation distortion would return some rationality to what people are borrowing and reduce this leverage on leverage house of cards.
Rents did not surge when Keating abolished NG like people are trying to gaslight. They went up marginally in Sydney and some other capital cities actually fell. The facts are out there if you care to look for them.
It creates an uneven playfield where investors can happily outbid hopeful owner occupiers because they don't need to make rational decisions about costing as they are happily paying over the odds for a loss making investment.
Australia is only one of THREE nations where NG is even legal. The other two Canada and New Zealand. All basket cases where it comes to rental affordability. The rest of the world manages to do without NG. You may argue other markets are also bad but they are surely no worse than they are getting here.
Negative Gearing costs the taxpayer $2 billion per year. Money that could be much better spent on health and education.
An investor buying their 3rd property isn't adding any supply, someone would have happily bought that property for themselves to live in.
Removing a tax rort isn't a distortion, the fact that it ever existed in the first place is the distortion.
Over 90% of NG claims are existing builds that have already passed hands at least once prior, not new ones. It is failing to add supply that it purports to.
The reverse is also true, NG does not increase demand. Price is influenced by supply and demand, i.e. population and available land. NG is just a vehicle to property ownership.
Rents have been rising well enough on their own. People claiming they will need to raise rents as a threat are happily ignoring the skyrocketing rents already! The market has become too sensitive to rates and your noble "investments" aren't helping. Removing this taxation distortion would return some rationality to what people are borrowing and reduce this leverage on leverage house of cards.
Guess what, the so called skyrocketing rent is due to interest, investors have not earned more, in fact they are bearing higher risks. There is a equation, investors plug in a set of numbers to make it work, when 1 number changes, other numbers change. Simple as that.
It creates an uneven playfield where investors can happily outbid hopeful owner occupiers because they don't need to make rational decisions about costing as they are happily paying over the odds for a loss making investment.
It's quite the reverse, it's often the would be home owners buying with emotions driving up the prices, investors simply move on to the next opportunity.
Investors have to live somewhere and have their own mortgage to pay, do you thing a lost leading NG makes their lives easier? Remember investors have to lose money in order to NG.
If non-home owners think NG is so unfair, join the bandwagon and see how it works. Renters can be investors, too. To most working adult children living with parents (i.e. not paying rent or minimum contribution) and complaint about property prices, take a hard look at your finances.
Negative Gearing costs the taxpayer $2 billion per year. Money that could be much better spent on health and education.
While not all rentals are make possible by NG, certainly close to 100% NG are rentals. Do you think a large number of renters suddenly have 10% (20% if they want to avoid mortgage insurance), and a good credit history to get a loan? And also afford the on going payments for years to come (mortgaging payments are much higher than rent).
An investor buying their 3rd property isn't adding any supply, someone would have happily bought that property for themselves to live in.
You are assuming everyone can afford to buy what they want, this is 100% untrue.
If non-home owners think NG is so unfair, join the bandwagon and see how it works. Renters can be investors, too. To most working adult children living with parents (i.e. not paying rent or minimum contribution) and complaint about property prices, take a hard look at your finances.
Ah yes, if you're complaining about not being able to afford property then you should just buy property, halleluiah our problems are solved
The NG argument was started to address housing shortage.
Properties in all price ranges change hands everyday, a large number are bought by wage earning working class people without help from BoMD, how can they afford them? Because they prioritise and make sacrifices.
While it's real nice to start a family and have kids, send them to good schools, go on overseas holidays and cruises, drive premium cars, have the latest tech and gadgets, go out for drinks and fine dining regularly, wear designer clothes and accessories, AND buy a house in the golden mile all at the time. That's not a realistic expectation for the vast majority.
People need to make choices, balance between lifestyle and home ownership, and the type of properties they can realistically afford. If they plan it right and still can't afford it, then they can't afford it, stop complaining.
The bad guys here is not NG or PG or landlord or tenant
Its the banks. Changing high interests, while making billions profit. Go attack them. Make thr big corporations pay more tax. Set limit how much profit they can earn. Prosecutes the directors when making mistakes.,not giving bonuses (Hello mr joyce Qantas)
This is classic whataboutism.
Trying to overlook egregious policies exacerbating difficult living situations by many by trying to shift blame to the banks.
Landlord here.
I didn’t invest on a property because of NG. So having it or not having it will not be a problem for me.
BUT, abolishing it without making sensible changes to supply and getting immigration under control is going to drive everything else to the ground.
Last week my agency called me and said they’re going to renew the rental for tenants with a 80/pw increase. I literally told them that is too much. They responded that, rentals for the area had blown over and they can even push to 100. I told them to keep it for 70…
All this madness is caused by absolutely piss poor decisions made by people in power and both landlords and tenants are being punished for it. Total bs.
While the banks raking billions profit.
Don't worry, your tenants probably still think you're a greedy piece of shit for raising their rent $70 per week even though all your holding costs have gone up exponentially.
Most property investors will tell you it hardly makes a difference to them (spend a dollar to save 30c and all the hassle of being a landlord etc), but mostly because they don't want to appear to be bludging off the tax payer and responsible for astronomical house prices and unaffordabilty. The same people will be completely against abolishing it though.
If NG was a PIA or not a nice little earner, these poor downtrodden investors / landlords would not keep returning to the bulging trough, over and over again.
Exactly my point, but of course they don't want to appear to be a plague on society so talk it up like they're doing society a favour.
No other county has such tax incentives and so much money tied up in property without any investment in a diverse economy. It's too big to fail and must be propped up at all costs
The govt could easily have a tiered system whereby your combined income & asset value has a top limit where you can't milk it anymore, or limit it to one/two properties, or to x amount of years or to new builds going fwd.
There's no balls left in Canberra, and the national interest has been subsumed by self interest and party interest.
Yes if we want more homeless rentier
Obviously all the poor, jealous communists on here would vote yes
Remove CGT eceptions for family homes.Instead allow us tax exemptions on mortgage payments.
People (renters) should see negative word in negative gearing means loss.
And help investors so they can keep renting.
NG is a marketing word by agency to not so smart investors so they think buying those apartments are such a good investment.
Landlord and renters both are victim.
As everyone can see from the poll the majority believes that NG should be abolished and Australia becoming a more socialist equitable country.
It’s time to stop the rampant capitalism and stop the greedy landlords from farming huge profit from NG and harming society.
Most agree with me and hopefully the dream of a new Australia for all will be realised soon!
Whilst I do think NG + capital gains discount should both be abolished, I think it’s a bit of a lost cause to get into.
It’s a political hot potato, it’s sunk 2 labor governments now, and even then, they planned to ensure exceptions designed to benefit the rich (eg grandfathering.)
So. Effectively it’s just a huge battle. It’s a criminal shame we can’t get rid of this subsidy for the rich but, there’s probably just better ways to fix housing right now. I’d say a focus on putting in new taxes (land, vacancy, etc) rather than cutting exemptions.
NG and CGT did not sink the ALP twice.Murdoch did.
Will never ever be abolished n nor should it imo. Any party that tries will be political suicide.. And ill keep buying my investment properties without a worry in the world.
The bigger picture is why Australia don’t have mineral tax like Norway. That a bigger pie that Australian are missing out on.
Because multinational miners own our resources and know who to give bulging brown paper bags to, under the table. Why do you think we give our gas away for zilch and buy it back for a fortune? Why do you think the NT govt opened up all the NT gas reserves to the yanks?.
We do. They are called royalties and are collected by the states
So many people wanting negative gearing abolished hilariously don't realize that it only makes those who have money or cashflow even more advantage over those who don't for property purchase.
Rich people choose to negative gear if it is of benefit to them for growth. If it was removed they would just put more money into the loan by investing less elsewhere or to get it positive gearing (or create a portfolio that positive gears across the entire portfolio within a trust account). Rich people have options that poor people don't.
Clearly one would need to investigate which has the better ROI before shifting any money in or out
Negative gearing is ALSO a stepping stone that allows the poor to become rich. Removing negative gearing just makes it so the poor are less like or NEVER to gain wealth whereas those who have the means will still remain wealthy and continue to grow their portfolio albeit at a slower rate.
This is bad policy and only being considered to appease the greens and get the labour housing policy through the senate. Negative gearing helps investors to build more housing stock. If the governments aim is build more housing, this is not the way to do it. Clearly our governments are not capable of building affordable housing. Everything governments build costs 1.5 - 2.5 times more than budgeted. That will only push up the cost to build and then it will be the tax payer subsidising the house as either government would need to sell it at a loss to keep the dwelling affordable. The government needs to create the environment to encourage investment in housing and the private sector will build it as it has done for years.
if you have more than 2 properties (investments) then you get no tax break. That's what I think would be appropriate.
yep. same with
if you have more than 2 children then you get no support. That's what I think would be appropriate.
Never thought of that, actually makes a lot of sense.
Yep. Look at wallet before going to bed and decide if can afford another baby or not.
@shutuptakemymoney101: Well like everything in this world think long term kids is expensive dont just think about that 20-30mins of joy
The people thinking short term instead of trying to get more tax breaks such as forcing govts to index tax brackets, giving up on the existing tax breaks because they "think" it will go their way. Govts want people to keep infighting on smaller issues so they don't look at the actual issue. Australia has wider issues with housing and removal of negative gearing or CGT isn't going to fix that. It will just take away existing breaks and put more money in the govt's coffer for which as already can be seen is never spent on improving social security.
I would be pro abolishing NG and CGT breaks if they create a separate fund using the extra tax collection towards social security but guess what they won't…. 🙃
As a tax payer, I shouldn't be subsidising someone's 40th investment property.
By all means for the first home on your tax return, but not for the mega "rich" who've enjoyed massive capital growth.
If investors paid tax on these, my and your personal tax and public debt would be far less.
As a tax payer, I shouldn't be subsiding single parents or someone's 40th kid.
By all means for your first kid, but not for the mega family who have excessively enjoyed growth downstairs.
If people stopped marrying due to hormonal imbalance, there would be a lot less welfare being thrown single parents trying to rort the welfare system
I'm sure this was a lot more amusing in your head.
Nobody ever got drunk and went home and bought a house, had a 9 month settlement and then received 18 years of capital loss on a property.
I hope that clears things up.
Sadly the government needs a larger population to support the 'ponzi scheme' of public debt.
You are missing the point. Just as you are, I am a tax payer as well and can also make declarations that I selectively decide to point at because it serves my personal selective vantage point in a sarcastic and meaningless way.
Negative gearing can be abolished but government also have to abolish capital gain tax. Or reduced capital gain tax significantly
How to lower housing costs.
The next question is.. how to lower the materials and labour costs?
What I feel all of these can result in economy recession, which means housing can collapse but we lose our jobs too.
Negative gearing inflates house prices, more stamp duty to government coffers
Immigrants inflate house prices as demand is driven up. More stamp duty to government coffers.
Real wages have not kept up with house prices by a long shot, so many people need to work more hours. More hours equals more taxable income for government coffers.
It's as if the government want higher house prices.
Sorry, I didn't post in all caps.
Please, please, please!! If your economics understanding comes out of a cereal box, I URGE you to consider the following breakdown before you go off on a rant, filled with emotion as opposed to logic and facts. There are three components to understand: deductions, gearing and negative/positive in the context of gearing.
Firstly let's take a look at allowable deductions:
Allowable deductions exist to avoid over-taxation. You should only be taxed once on your true income. Just because you earn a certain amount in a year, doesn't necessarily make it your assessable income. The simplest way to look at it would be the difference between revenue, cost and profit. You want to be taxed on your profit, not your revenue.
Next let's take a look at the term Gearing:
Gearing simple means borrowing money to invest. It can be against ANY asset class (shares, art, cars, managed funds, crypto, commercial property, residential property). From a taxation perspective, the interest that you pay on this loan is tax deductible. Furthermore, usual costs such as maintenance/fees/upkeep of the asset as also tax deductible.
Now what about positive and negative gearing? Well, when you invest in an asset, you may also generate an income from that asset (such as dividends or rent). If the income you generate is greater that your interest paid and associated costs, then your asset is considered to be positively geared. That is, you're making more money than you're losing. So after you have made all your allowable deductions the income you have made with your asset gets added to your assessable income (most likely from wages) and you pay your marginal tax rate. Your assets can go up or down in value, but that won't be counted until you dispose of that asset (e.g. selling it).
Therefore a negatively geared asset is simply one that loses more money than it makes. Interest on loan and all other associated costs are greater than the income it generates. The value of the asset can go up or down in value, but that won't be counted until you dispose of that asset (e.g. selling it). So if your asset costs for the year is greater than you asset income, those losses in turn get applied to your personal income, in effect lowering your personal income.
These rules exist regardless of asset type. So when you say "Negative Gearing," you are actually referring to 3 separate things: borrowing to invest, making allowable deductions and costs of the asset being greater than the income. When you shout " let's get rid of negative gearing" which of these 3 are you wanting to change? My assumption is allowable deductions is what people are wanting to fix—but remember, these deductions are allowed for ANY income generating activity, including your personal deductions for work.
Correlation isn't causation, but looking back historically, house prices have jumped more when governments tried to make it easier for people to get into home ownership: FHOG, stamp duty exemptions for first home buyers, interest rate cuts, "fiscal stimulus packages". I will make one concession, however, and that is the CGT discount. Whilst it simplified tax burdens on sellers, it also made speculating on property so much more desirable due to the nature of holding for at least 12 months in the hopes that your investment would grow in value and being able to save a bunch of tax as a result.
You've made this long winded explanation assuming people "just don't get it" but I think most people simply just disagree with your premise.
This is the issue I have:
You want to be taxed on your profit, not your revenue.
With regards to investment real estate, I completely disagree.
Allowable deductions from taxable income from loss incurred on an investment property should be zero. You should not be able to deduct interest, finance setup, repair costs, costs of maintaining the investment, insurances, or cost of upgrades and renovations. You should bear these costs yourself, and be taxed on 100% of applicable revenue. If the profit doesn't cover your expenses and you make a net loss, then tough luck: divest.
Having the tax structure setup the other way as it is now, just means taxpayers are subsidizing the operating costs of failing investments. We shouldn't be chipping in to help investors grow their nest eggs. It is compassionate but landlords do not need welfare. They can make their investments profitable, or divest them to someone who can.
You confirmed my assumption in the second-last paragraph. And based on much of the conversation so far, I do believe most people don't understand the concept of negative gearing. If they did, they wouldn't be so up in arms about it. In fact, I couldn't care less if deductions were disallowed for residential properties—what would end up happening is that costs of rent would increase, making everything hurt more for renters. All that would happen is a lot movement for not much result. Wasteful.
People who use NG strategies are usually high income earners elsewhere and cash-heavy. Notice I said NG, and not deductions, as there is a distinction. They can afford to take the hit, because they are banking on capital growth at the cost of income. So if their property still has huge demand (immigration, lack of new development, city-centric offices/work) they're still laughing at the expense of people who want to be owner occupiers. You're trying to kill an elephant with a BB gun.
On the flip side, the people who would benefit from deductions would be mum and dad investors, hoping to actually make a yearly profit (net positively geared) but having a safety net of deductions in case of a rocky year or two (see COVID-19). These guys are not the target audience for NG strategies!
Therefore, if capital growth is their game, hit them where it hurts—CGT discount. Make it hurt more by introducing more tax bands at the higher end. Made over $5m in assessable income for the year, guess what, you've hit the 85% marginal tax rate.
So yes, forgive me if I think most people don't get it. Because, well, they don't!
Yes, lets get rid of negative gearing and see the housing crisis worsen.
NG was abolished in 1985 and reinstated in 1987. Based on this history, this would not solve the housing crisis. The supply will be sharply reduced while the demand always high.
Thank you for being someone who's got an understanding of the history of such a policy change and how economics is applied to such a situation.
The average joe is likely seeing applying and taking away a policy as "A + B = C… therefore C - B = A". However, economics is not going to be properly modeled with basic algebra. There's a lot of other factors that change over time that needs to be factored in.
I may not be a practicing economist anymore (found my passion, and better means of income elsewhere) but it still amazes me how such a large portion of our population has such a strong opinion on things without sufficient knowledge to end up at the best opinion.
Like it or not, negative gearing is embedded in our property market now. People just need to deal with it, instead of seeing abolishing NG as a silver bullet. All getting rid of NG is going to do is push out the mum and dad landlords from the market and make the ultra rich even richer whilst slowing down supply growth.
Unfortunately, politicians will make decision based on which ones gets more votes.
Supply is definitely the biggest problem here.
Yes, unfortunately, it's just a popularity contest at the end of the day.
And agree… supply is the biggest issue. Land is not an issue… there's enough of it (though, not as much as the general public thinks but there's enough). Materials supply and tradies is the first shortcoming. The second is the amount of red tape one has to go through to build something (I've spent over 3yrs getting my house built and am still going through red tape with landscaping).
Two more issues Governments need to get on top of before they become major issues:
1) the growing number of dodgy builds around the place riddled with hidden defects. I've spent too much of my time sorting out such issues for two different body corps over the past 6yrs.
2) making body corp managers responsible for correctly dealing with building maintenance and defects rectifications. At the moment their capability and consequences when fudging up isn't where it needs to be to make them do the job properly.
Whilst it's true this happened, in 2 short years there was no dramatic change in supply, rents, loans or sales. It was repealed because of winging from John Howard's mob, not because the policy was having any unintended consequences.
Learn from Singapore public housing HDB program. This is the best way to solve the housing crisis problem.
I travelled to Singapore last year and I heard positive feedbacks from the taxi drivers about the living quality there and also housing.
Well all the HDBs are leasehold.
Do you think it is not good?
There are great things about how Singapore has dealt with housing.
But IMHO, having known quite a few Singaporeans over the years, their culture probably enables for such a solution to work and thrive. I'm not sure Australians will be able to do the same… at least not without a huge cultural and paradigm shift across our population including a gutting of key bureaucrats across the public service. It's not the politicians… they take advice from the various top public servants who will be more concerned about their jobs and tend to give safe advice… not necessarily advice that solves the issue.
I'd like to think that Finland's Housing First program would work in Australia but we neither have the political will, nor sufficient backing from society for such a program to work. An old property of mine was next to commission housing and after seeing that unit get trashed over the 17 or so years I owned that unit I can see why a large portion of the general public doesn't want to see so much of their tax dollars go towards public housing.
HDB works because majority are paid by CPF (37% of wage). CPF is similar to super, but can be used to pay for housing (buy not rent).
They can afford high CPF because they have low individual tax ($8k on $120k) and low company tax (flat 17%).
Tax is low because they have limited welfare and healthcare is not free.
So, HDB by itself won't work, income tax needs to be drastically reduced, so people have money left to pay for housing. At the same time significantly reduce welfare and remove medicare, because there is no tax to pay for them.
One big difference: Singapore is not a welfare state, their system works because majority of their citizens contribute.
We shouldn't be beating up the people that are carrying the bulk of the nation on their shoulders. There needs to be incentives in place for the high functioning people to do better. Once they throw in the towel, there is no future for Australia.
On another note, if tax revenue is the goal. We should look at ways to elimiate tax evasion. Instead of looking at squeezing more from the people that are already heaavily burdened for doing that bit extra through out their lives.
It's a shared responsibility at the least(Unless your using a chicken and egg analogy) and it's wage earners carrying the bulk of the nation on their shoulders.
The only time I see Gina & Twiggy lift a finger it's the pinky or with a gold plated shovel opening the mutilation of another part of our country, to sell to China.
When AI starts engulfing middle management and CEOs jobs ,we'll start to see some fwd progress in balance.The money saved can float down stream (LOL)
When I purchased my first property at 20 I was sold negative gearing as a means to make my property purchase more affordable. I did very little research and due dilligence and was renting a room in a share house at the time. Since then, negative gearing bleeds my cashflow to death and gives me a comfortable 5 figure tax return each year.
That cashflow issue is why I am no longer am a landlord.
I made my properties work for me over the past 18yrs, and combined with my wife's property, we look like we'll now own a house with it potentially paid off once we move in and my wife sells up her property. That's quite a fortunate position to be in so my wife and I will spend future years focused on other things such as travel.
The past 20yrs has been taxing enough. Time to take life a bit easier.
It's absolutely a drain! I purchased three properties before being married and the the most recent PPOR is under both our names. Wife hasn't worked in the last 5 or so years - especially with two kids at home it's been a pretty stressful time on a single income. We still do international trips annually as our families are all overseas.
I have thought about selling off one to reduce the stress, but given how the property market is, I know if I hold on and wife returns to work in the next year or two, it will all be worth it. I believe Australia still has a host of "mum and dad" investors like myself unlike the US where allegedly Black Rock are buying up huge estates etc.
May even look at purchasing another IP later on after the wife returns to work, as I don't have the mental capacity to deal with the roller coaster of crypto.
If it happens, landlords will simply increase the rent since supply with drop dramatically while demand continues to increase.
They have already tried this in the mid-80s.
Yeas, they sure don't need a new reason to cash in, that's for sure.
They'd be stupid not to.
Business is there to make money.
Of course, and the larger community knows it. Rank opportunism during other ppls suffering is a sure way to earn a push-back in some form.
@Protractor: I don't understand how you get to this.
So are you suggesting that landlords should buy properties and then take the losses so others can enjoy the fruits of their labour as a charity?
Should all businesses do the same?
@imurgod: No (how the hell did YOU get to what YOU'RE saying?) I'm saying that in recent times PLENTY of landlords have cashed in during a shortage due to the opportunities that arose.Immigration etc. Stories everywhere if you take the blinkers off. And the tide may well turn on NG and CGT if the govt grows some balls.
Homeless ppl have families & peers who vote.When combined with ppl not getting any benefit from another ppls tax benefits, those 'victims' of the crisis & their families/peers add up in voter numbers. If not now, when is what I would say to this govt.They just need to do it sensibly,incrementally and sell it well.
The Noalition will say no anyway.That's a given
@Protractor: Oh I'm sure it'll go nowhere, I agree. That said, I think I may be misunderstanding you.
An investor buys a property to make as much money as possible, right? (Like they would in any business or investment).
The homeless and the woes of the world isn't their problem as much as it isn't yours.
@imurgod: That's your clinical view. But self serving politicians who want to get re-elected have to factor in this thing called 'greater good' and use their (wait for it) 'conscience'. Foreign words [language] not common on the right of the rudder.
@Protractor: I agree, in an ideal world this would occur and we'd have no climate chance and all the rainbows would be made of candy.
Tell me, when have you seen politicians do that anywhere?
Also, who's going to provide these rental properties at a loss for everyone to live in?
@imurgod: You keep twisting reality. You don't have to run a property at a loss at all. You just don't need to screw a tenant over, stick a new one in and cash in.If you think that never happened in recent times, I can't help help you.
In your paradigm there's only maximum profit or loss, with no middle ground. Too many greedy fkrs (VERY! recently) chose the former. A lot of ppl would lurve to rip the tax teat from their mouths. Believe me.(Or not.)
@Protractor: Oh, my bad, I didn't understand.
So I own a business which employs 15 people.
I should not try to get maximum profit?
I also have a share portfolio. Should I call my broker and tell him to reduce my income and capital growth?
I'm struggling to see the difference.
@imurgod: Capital will generally move to where it's treated better over time. Many investors have already seen the writing on the wall from Federal and State Govts grabbing at their throats with increases in red tape compliances, Land Taxes, neg gearing etc so the reallocation process is well under way. House prices are still high so they can simply flog the properties. It's then easy to invest into a different direction, for example buying offshore ETFs. This is not a good thing for renters. Politicians are as usual using divide and conquer, so we argue with each other rather than looking at where the real problems are.
@imurgod: No wonder your struggling. You do obtuse really well. Keep it up and you'll be at ignorant before you know it.
The difference? Human beings with lives .OMG lost cause. You'd invest in shares where slaves do the work. In this situation ppl go without food to pay rent. Broker? OMG, you have no moral RADAR at all. I hope that you don't have 15 employees. For their sake.
@Protractor: You're being blinded by your feelings and tall poppy syndrome so you can't understand the facts.
What have I done that's wrong? Should I apologise for my success, hard work and good decisions?
Are your failures my fault?
Notice how you have completely sidestepped my rebuttal and got personal because you know I'm right and you have no answer?
Where did I say I'd invest in slavery? (FYI, my portfolio is a socially responsible spread).
Everything you've said shows that you have a lack of intelligence and don't really understand even the basics of how any of this works at any level.
You just think the world owes you something despite you making poor decisions and being lazy and so you abhor people who work hard to achieve and get ahead.
@imurgod: Socially responsible?. WAFJ. You publicly broadcast your views on maxxing out rent / profit above the humanity side ot the equation. Never mind, let someone else do your share you poor (loose term) socially persecuted person.
I don't think the world owes ME anything. It's what we owe ourselves (morally) that we take to the grave Richie Rich.
@Protractor: You're making a lot of incorrect assumptions based on hate, fear and, above all, ignorance.
You clearly believe the world owes you. It's been your message all along.
I would bet that I do more for charity and social justice every year than you have done in your whole life.
Once again, you have a simplistic view of the world and you don't even have a basic understanding about how any of this stuff works.
You haven't been able to answer any of the questions posed to you because they destroy your ludicrous, half-cooked argument.
You're just upset and confused so you have to resort to personal attacks in an attempt to make yourself feel better about losing this debate so badly.
It's ok, I support your right to be wrong.
@imurgod: And I support (nay encourage) you're right to be a direct and blisteringly accurate personification of your own opinion of me, as above. In other words, your walking my talk, and your own.
Our Governments are retarded, on both sides. They are terrible financial controllers. The govt is continuing to become a larger part of the economy. It reduces wealth overall because govt is generally unproductive. So many examples of this historically and always ends badly.
Their tax intake increases significantly every year through inflation, and further via economy expansion which happens without tax increases. Still, they are never satisfied, they want to increase percentages, add new taxes, reduce deductions etc on top. They use the politics of envy in the media, so people not using it will vote for increases thanks to jealousy.
In this case, it will hurt many others because it will increase the cost of rentals and less stock will be available.
Immigration = Demand
Especially when they're bringing their whole tribe who will be on centrelink for a few decades covered by the taxpayer.
For bank bashers, you may like to know the following:
For companies that cannot borrow from the bank, they often enter the secondary market, where private entities will lend to them usually at 15%+. This is very common.
The reason you can borrow around 6 ish % is that the Big 4 are highly rated at AAA or AA- internationally. Therefore they can borrow at 5 or so and lend to you for a 1% margin. Now if they didn't make that 1% they would be down rated and would have to pay higher that 5%. Do you get it yet? The only reason you can borrow so low is that they stand in front of you with a AA- rating.
It's like bashing Woolworths or Coles for gouging with a 3% margin. It's not much actually and it's not gouging. They need to be healthy to provide you the service.
Why are you all squabble amongst yourselves distracted away from the government incompetence, overspending and overreach? Cut taxes by draining the swamp in Canberra, state and local. We need more focused, efficient, effective smaller and cheaper government at all levels.
If you abolish local govt entirely, you can have my vote. If you implement laws that make elected state/fed reps subject to a costing BEFORE the election of all promises that leads to a 'must deliver' binding contract post election (wars and catastrophes aside) you have my attention.If you broaden it out to ensure all political party meeting minutes released immediately after they are voted out, I'm in.
If you demand that we citizens get to be consulted and ASKED about the spend & involvement in wars and weapons ,I'll tick the box. I'll even lobby for your sainthood if you arrange the swamp to release all docs and discussions with the USA on all matters affecting our sovereignty (not direct security or defence) docs) post WWII. We have a right to know what's being reamed up our 'region', why where and how much.
Well a majority think it should be abolished, but as that would reduce the amount of tax payer's money that rich investors, oops I mean mum and dad battler investors (according to the gov) receive, then it won't happen.
Many countries have limit to how much negative gearing one can claim in a financial year. Capping it could be a viable solution.
Removing NG means less transactions on Houses. This means less revenue (stamp duty ) to state government.
Poll is favourable to almost 900 who are saying no but interestingly almost 500 are somewhat in favour of keeping it.
Keeping rental income below the property expenses is needed for negative gearing to be used.
If negative gearing is abolished, rental prices will surely rise as landlords will raise the price to compensate.
For me personally, negative gearing allows me to afford to keep my property, and allows me to keep the rent at a reasonable rate for the tenants.
I board elsewhere and i rent it out whilst paying it off and the expenses (mortgage, bodycorp, rates, maintenance, property management fees) are more than the rental income, which allows for the negative gearing.
I don't depreciate because the property is too old - many people don't realise that you cant depreciate if the property is older than 40 years.
I'm sure there are those that abuse the system, but misuse doesn't warrant abolishment, it warrants crackdowns on people abusing the system.
It doesn't make a huge difference day to day, but come tax time that extra bit of refund really helps with the costs of living.