Article - Neg gearing attacked for driving up property prices

yorke said:
And rent assistance would jump from the current 100 bucks a f/night to at least 100 bucks a week. I do hope they would cut NG since that would cut down the number of investors. The last time they tried this it cause a rental shortage and both the rents and existing property prices to go up heaps.
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This is what happened before price wise but as usual people twist the information at hand and give you reasons why it will not push up prices this time. Blah blah blah.
To me the long and the short of it is the government is trying like made to increase building as this is the life blood of the country,right or wrong. Removing negative gearing will make this worse. I could only see them touching it after a recovery has started. Bad move to touch it on the way down.
 
devo76 said:
To me the long and the short of it is the government is trying like made to increase building as this is the life blood of the country,right or wrong. Removing negative gearing will make this worse. I could only see them touching it after a recovery has started. Bad move to touch it on the way down.
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Removing it will make little difference as long as rates are this low. If they did remove the NG there would probably be a large number of owners who would go back to cash transactions. If you can't claim it why bother declaring it ?;)
 
I think one of the 'rules' of any investment is that it not be done exclusively for tax benefits. That is to say, the investment must one that can be fully expected to generate a good return Vs risk to the investor. So IPs must be a good investment with or withour neg. gearing to my way of thinking.

Govts. come and govts. go and tax laws change, but IPs are a longer term strategy than a 4 year govt. term.

Do I like neg. gearing? - sure. :D
Would I still invest in IPs without it? - yes!
Would I be able to hold as many IPs without neg. gearing? - probably not :(

Do I think they'll take away neg. gearing?
Some investors needing to off-load some of their stock would have the effects of:
1. Dumping stock on a market that could hardly be said to be 'robust'. Not likely in the current economic climate
2. Removing available rental stock from the market with already tight vacancy rates. I don't think K Rudd wants his time on ACA when ppl have to live in their cars (more than they do now):(

As others have rightly pointed out, this was tried before and it failed miserably and had to be reversed. It is political suicide.

The govt. has no way that it could provide the shortfall from its housing commission stock and even now is seeking private developers to build its low cost affordable housing. And is subsidising the lower rental return of investors who buy it.

This removal of neg. gearing thing raises its ugly head every couple of years and then goes away again. IMO it won't happen unless there is a major change in our tax system (which can & admittedly has happened in the past).

To me neg. gearing is just the icing on the cake but the cake is still worth having without icing on it. Just like some kids, some ppl only want to lick the icing off and give the cake to the dog.:p
 
Token Funder said:
Agree restrospectivity applied suddenly would be unacceptable, but pulling for new purchases of existing stock (at least) wouldn't disadvantage investors.
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"Would be unacceptable" and we have the Senate to help ensure this does not happen.

"Wouldn't disadvantage investors" - still does, but that's investment policy (eg pushing investments from RE to shares). The desirability of investment in RE would be that much less as historical experience in the Keating era showed that it had dampened IP values (more on sale in the market) with increases in rental. Long term IP investors will probably still stay in IPs and batten down waiting for history to repeat, with expectation of govt financial incentives to be offered later on to undo this experiment. The last time it benefited me with higher depreciation rate for the building.
 
What makes me laugh is how the article states that investors are using neg gearing to "avoid paying their taxes".

Hang on...isn't the ATO a Government institution? Didn't the Government introduce neg gearing for investors as an incentive to get them to invest?

We are simply using a tool provided to us - legally - by our own government.

How can this be "avoiding" tax.
 
yeah the article makes me laugh too.... i rekon the writer smacks of Today Tonight sensationalism.

Some good feedback here, thanks everyone :)


To me personally... losing NG is not a huge drama. We work out all our cashflow budgets prior to tax advantages, so we can manage without NG. However, the increased rents would definitely be a plus for me.

I'm looking at this idea and its effects to the general population as a whole. The wider effects would be far more costly to the govt than what NG currently costs, as LynnH pointed out already. The Govt couldnt possibly provide all the rental accomodation that is currently provided by "Mum & Dad" investors who typically have large -ve cashflow and rely on NG. Lets be honest, the MAJORITY of rental properties are owned by these Mum and Dad investors.... us SS types make up a much smaller percentage i rekon.

The people that are likely to be most affected by removing CG are middle class mums and dads, and renters. Both these people would quickly vote out ANY govt that negatively affected them in much a manner IMO.
 
Relax guys you stress too much.
If they remove negative gearing, rents will go up faster as supply of rental accomodation will dinish, nothing to stress about.
Last time the government let it get persuaded by an academic on this issue was in the mid 80's. They removed negative gearing, effect rents sky rocketed, effect negative gearing reinstated a year or so later.
 
chilliaa said:
Relax guys you stress too much.
If they remove negative gearing, rents will go up faster as supply of rental accomodation will dinish, nothing to stress about.
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Who's stressing ? Bring it on, its about time the renters pay full price or buy their own place.:D

Last time the government let it get persuaded by an academic on this issue was in the mid 80's. They removed negative gearing, effect rents sky rocketed, effect negative gearing reinstated a year or so later.
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I remember it well, soon after that the $45K houses went up to $80K+ :D
 
chilliaa said:
Relax guys you stress too much.
If they remove negative gearing, rents will go up faster as supply of rental accomodation will dinish, nothing to stress about.
Last time the government let it get persuaded by an academic on this issue was in the mid 80's. They removed negative gearing, effect rents sky rocketed, effect negative gearing reinstated a year or so later.
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But hang on...Steve Keen is still lurking. :eek:
 
Affect on rents after the re-introduction of negative gearing

Does anyone recall what happened to rents after the re-introduction of ngeative gearing? Did rents fall back again?
 
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