Yes but that within itself is interesting,25 years ago ASX listed equities were not in the Government Target zone only property,they could play it the same way,anyone on centrelink sit down money would vote the back in,and Labor has about 1% chance of doing a 2nd term,and they know it..
Is it the end of negative gearing
- Thread starter Dan_p
- Start date
I dont know, gov can imagine quite large blow-outs
If NG and various other government concessions hadn't existed, many developments over these years might not have been started, let alone completed.
To a small degree yes, but most developers are in there to make a profit not a loss, however there is a case for allowing developers of new property negative gearing. But over 90% of speculators purchase existing property, outbidding first home buyers via their unfair tax advantage. Without negative gearing on existing property we'd have lower prices, higher home ownership rates and higher yields for property investors (via lower property prices, rents wouldn't change, there are still the same number of people and properties)
Can you guarantee lower prices? Didn't think so.
How many speculators are there driving up prices? Can't see I've seen them on the ground. 99.9% of the auctions I've been to, the overbidding is done by someone falling emotionally in love with their future PPOR and getting carried away.
Think you'll find the majority of investors want to buy a bargin ... to make a profit as you said ... and are not emotionally involved so hit their ceiling and stop.
Perhaps you need to come back to the coal face in Australia for a while.
The thing that gets me about those who whinge about the "unfair advantage" of negative gearing for those who enjoy it, is they don't seem to realise that it is there for EVERYONE (including the whingers) to participate in and enjoy.
So, instead of whinging about it and those who have it...get into it.
So, instead of whinging about it and those who have it...get into it.
Comrade Joe
without negative gearing house prices would be higher, there would probably be more than 30% less houses getting built. Simple supply and demand means prices will increase. I have built 3 houses that wouldnt exist if not for NG. Taken desperate depressed tennants directly out of depressing dilapitated public housing, put them into new bright sunny enviroment they they thought they would never have, totally changed their state of mind to a positive one, so much so they found the energy to get motivated, to get of their miserable ****, get of the dole, and get a job and learn the sastisfaction that gives , and pay taxes . Its no skin of my nose as they are neutrally geared or slightly positive with tax deductions.
without negative gearing house prices would be higher, there would probably be more than 30% less houses getting built. Simple supply and demand means prices will increase. I have built 3 houses that wouldnt exist if not for NG. Taken desperate depressed tennants directly out of depressing dilapitated public housing, put them into new bright sunny enviroment they they thought they would never have, totally changed their state of mind to a positive one, so much so they found the energy to get motivated, to get of their miserable ****, get of the dole, and get a job and learn the sastisfaction that gives , and pay taxes . Its no skin of my nose as they are neutrally geared or slightly positive with tax deductions.
Article in todays The Age about negative gearing:
http://theage.domain.com.au/home-in...ives-of-living-in-the-red-20120413-1wx63.html
http://theage.domain.com.au/home-in...ives-of-living-in-the-red-20120413-1wx63.html
or the elderly couple living in the same house on the acre block for over 60 years and not wanting to sell their home
Or is it someone like Pearl Wong who buys property and lets them fall into disrepair all over the country in hope of making a killing on them in the future?
This would be very speculative with huge holding costs to maintain grounds, insurance, pay rates and loan interests - just for a hope of making it big in the future.
this is absolutely the people they are targeting with a land tax proposal.
Negative Gearing
If the Government decided to end negative gearing the housing market would crash. There would no incentive for investors to buy houses for rent and many who already have property investments would most likely sell them to get their cashs out and into a different investment. They might make a loss. That happens with investment sometimes - it's all a risk. The fallout from a dramatic cut in negative would be a disaster. Self funded retirees could end up on the pension, costing the Government a heap.
This could mean that the house prices would crash and owner occupiers would lose any equity in their homes. I reckon getting rid of negative gearing would have a major detrimental effect on the economy - too many ordinary folks have planned their investements anr retirement around it.
If the Government decided to end negative gearing the housing market would crash. There would no incentive for investors to buy houses for rent and many who already have property investments would most likely sell them to get their cashs out and into a different investment. They might make a loss. That happens with investment sometimes - it's all a risk. The fallout from a dramatic cut in negative would be a disaster. Self funded retirees could end up on the pension, costing the Government a heap.
This could mean that the house prices would crash and owner occupiers would lose any equity in their homes. I reckon getting rid of negative gearing would have a major detrimental effect on the economy - too many ordinary folks have planned their investements anr retirement around it.
I have no idea if it would or it wouldn't. The only reasonable thing to do is go back to 1985 when Hawke and Keating did get rid of it and see what happened then.
All of the articles referred to so far, including all of the newspaper articles, are exclusively targeting residential property only. Of course, claiming a deduction for when expenses exceeds income is not restricted to just the "housing market".
Of course, there is every other property type as well which combined would swamp the housing market, not to mention all those buying shares with a loan.
All of those markets fortunately don't get picked on cos they don't carry the burden of all of these emotive images of young families and homeless individuals.
Can't afford your loan repayments and are forced to offload some of your Telstra shares due to the negative gearing tax laws changing - big deal - who cares.
Can't afford your loan repayments and are forced to sell your small 3x1 house due to the negative gearing tax laws changing, thereby displacing a young struggling renting family with another baby on the way to a prospective PPoR buyer......OK.....now the violins can come out.
I think it is probably half the fact that emotion is involved, and the other half is the dim-witted 23 yo journalists typically writing the articles don't even realise there are other investments out there affected - all they know is the rental housing market cos they are just old enough to have rented a flat recently themselves.
I don't have a big problem with them ending it, as long as they look at ending capital gains tax and stamp duty taxes as well.
(As I believe these have been added in part to help pay for the loss in tax revenue from negative gearing!!!)
Removal of negative gearing would motivate a lot of people to sell, so yes prices might take a hit. But those selling, may not mind if they do not have to hand over so much in tax.
Removing stamp duty would also hold up the other side of the coin, benefiting buyers.
I think if all three were done, it would stimulate the housing market.
The severe shortage of rental property will put a floor under prices. IMO.
(It might bolster the australian share market too, which is a good thing as people look to leverage into that to negatively gear..also legally possible(i think I haven't yet done that)
(As I believe these have been added in part to help pay for the loss in tax revenue from negative gearing!!!)
Removal of negative gearing would motivate a lot of people to sell, so yes prices might take a hit. But those selling, may not mind if they do not have to hand over so much in tax.
Removing stamp duty would also hold up the other side of the coin, benefiting buyers.
I think if all three were done, it would stimulate the housing market.
The severe shortage of rental property will put a floor under prices. IMO.
(It might bolster the australian share market too, which is a good thing as people look to leverage into that to negatively gear..also legally possible(i think I haven't yet done that)
IIRC, I thought the government had the view that negative gearing is allowed as there is an expectation that the investment will eventually turn an annual profit and the investment would then end up paying tax.
BUT, I guess 90%+ of property investors (and probably a vast majority of non-property investors) invest and get a negative cash flow and hence can use negative gearing for the life of their investment until they sell it when it might just start to turn a profit.
Similar to CGT, why could ALL annual investment losses not be carried forward and used to off set future annual gains?
BUT, I guess 90%+ of property investors (and probably a vast majority of non-property investors) invest and get a negative cash flow and hence can use negative gearing for the life of their investment until they sell it when it might just start to turn a profit.
Similar to CGT, why could ALL annual investment losses not be carried forward and used to off set future annual gains?
An expectation is different from reality. Besides, the reason why people remain negatively geared is because they re-leverage the original property to purchase another one. If they didn't increase their borrowings for a different purpose I am sure that the original purpose would be a positively geared once over-time, hence there is a realisation of an annual profit on that property.
So if IP is so much less attractive as an investment class with the abolition of NG on private rental (state, non profit and corporate residential housings exempted presumably), IP valuation should drop and state governments should revise their existing opinion of levying land taxes higher than the council rates, while their council rates invariably head lower... So if state governments get less revenue from private landlords, should council rates increase all round if public housing is to increase to make up for the shortfall from stocks of private rental and lower land tax? If logic still applies.
You're assuming a big bang end to NG. What would be far more likely would be a phased elimination of it, e.g. not allowing it on new IPs, only allowing losses to be claimed at a lower tax rate, allowing 80/60/40/20/0% of losses to be claimed over a five year period, or the UK system of rolling forward losses to be set against profits from the same source.
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