Discussion re Neg Gearing

Will they remove Neg Gearing

  • Yes

    Votes: 10 19.2%
  • No

    Votes: 27 51.9%
  • They will reduce neg gearing % but not remove it

    Votes: 15 28.8%

  • Total voters
    52
  • Poll closed .
Of course losses would be carried forward and offset against future income. This is how the tax system works, just like running a business, which is what you should be doing rather than speculating.It's hardly the end of the world if NG is abolished.

Agreed but this is assuming decisions regarding tax policy are made by rational adults
 
You'd need to then re-write the entire tax act and say that expenses are disallowed....so cap ex spending will cease and destroy the economy

Not to going happen. NG is fairly unique, talking about offsetting investment losses against salary....allowing carry forward losses against income produced by that asset is pretty much universal.
 
You'd need to then re-write the entire tax act and say that expenses are disallowed....so cap ex spending will cease and destroy the economy

Not to going happen. NG is fairly unique, talking about offsetting investment losses against salary....allowing carry forward losses against income produced by that asset is pretty much universal.

Fair enough but transaction costs need to be reduced in this case, in NZ these are much lower for example. The government can't have it both ways, presently state government budgets rely on stamp duty and land tax.
Super concessions will probably be looked at as well.
 
Wouldn't care if NG went since I only buy profitable property
Negatively geared property can be profitable, depending on capital growth over the period you own it. Perhaps you mean cash flow positive? & even then it depends on how much cash you put into the deal... a low yield apartment on Sydney Harbour can be cash flow positive if you buy it outright with cash. A cash flow positive property could also be non-profitable if prices declined and you sold for a loss.

i.e. Negative gearing has nothing to do with whether a property is profitable or not.
 
I still think the "PPOR" will be the first cab off the rank,then there are plenty of simple based ideas out there from a simple sliding capital gains based ""TAX""on how long you have held the property,or as someone like Behavior Economist US based Robert-Shiller puts it "it's"convenience rather then logic"..
 
Negatively geared property can be profitable, depending on capital growth over the period you own it. Perhaps you mean cash flow positive? & even then it depends on how much cash you put into the deal... a low yield apartment on Sydney Harbour can be cash flow positive if you buy it outright with cash. A cash flow positive property could also be non-profitable if prices declined and you sold for a loss.

i.e. Negative gearing has nothing to do with whether a property is profitable or not.

Always buy with 105% finance, amd even if ya dont, always have a fair comparison of investment prospects that way
 
Agreed, this is the true way to gauge negative/positive.

If NG was abolished then those properties that are cashflow positive after being adjusted for taxation would Instead become losses.
 
Agreed, this is the true way to gauge negative/positive.

If NG was abolished then those properties that are cashflow positive after being adjusted for taxation would Instead become losses.

Losses for the current tax year... I'd expect they could be carried forward even if NG is removed (i.e. losses would be quarantined to claim against future income from the same asset class).
 
Losses for the current tax year... I'd expect they could be carried forward even if NG is removed (i.e. losses would be quarantined to claim against future income from the same asset class).

In that case, how does it save the government money if all that happens are losses are deferred until you can eventually claim them anyway against a gain?

Or would they be hoping that removing NG sinks enough people that they have to fire sale and write off their losses before they make any gains to offset them against?
 
In that case, how does it save the government money if all that happens are losses are deferred until you can eventually claim them anyway against a gain?

Or would they be hoping that removing NG sinks enough people that they have to fire sale and write off their losses before they make any gains to offset them against?

It wouldn't save much money for the government budget when measured over the long term (perhaps a little due to reduced interest paid on debt/reduced real value of deductions over time & some investors who may not ever make a profit on property to reclaim losses).

The problem I have with it is that it improves the ability for investors to pay more and carry a larger amount of debt than they would have otherwise, pushing up prices and making property less affordable for those buying a home to live in (there does need to be a level of investor activity and not everyone will be able to buy, but there's clearly an excess of speculative investment in some cities at the moment). Negative gearing isn't the only contributing factor though.
 
It wouldn't save much money for the government budget when measured over the long term (perhaps a little due to reduced interest paid on debt/reduced real value of deductions over time & some investors who may not ever make a profit on property to reclaim losses).

The problem I have with it is that it improves the ability for investors to pay more and carry a larger amount of debt than they would have otherwise, pushing up prices and making property less affordable for those buying a home to live in (there does need to be a level of investor activity and not everyone will be able to buy, but there's clearly an excess of speculative investment in some cities at the moment). Negative gearing isn't the only contributing factor though.

Ah, I get you. Abolish it as a means to cool/stabilize the marked rather than as a cost saving initiative. Thanks, makes sense.
 
In that case, how does it save the government money if all that happens are losses are deferred until you can eventually claim them anyway against a gain?

Or would they be hoping that removing NG sinks enough people that they have to fire sale and write off their losses before they make any gains to offset them against?

Because if the deferral is permanent then that is a kinda one off saving. In aggregate and on average it would be a permanent deferral. eg My business has expenses of $100k per month and I currently pay all those expenses with cash as I get the goods/services. If I can get all my suppliers to permanently offer 30 day accounts then I've kind of just made $100k. My business sells $200k pm and all clients have 30 day accounts. If I can get all my clients to pay COD, then I've sort of just made $200k. Simplistic example, but I hope you get the idea.
 
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