negative gearing and the labor party
- Thread starter INVESTRON
- Start date
Well, Australia the great land of 47% tax on income, 11% tax on consumption on whats left, then fuel taxes, payroll taxes, stamp duty, land tax ...and the list goes on and on. Lib or Lab this is socialism, capital is quicky returned back to a central all powerfull all knowing government for redistribution based not on performance but on need. Every 3 years we choose between socalist party A or socalist party B.
Because I am Australian do I have a right to a free house? And if so who should pay?
Peter Druker asked in one of his books that insitutions and laws need to serve society, ie are created for societies benefit. However over time the insitutions and laws may fade and cease to be effective.
30 years ago is a long time, is the continued support negative gearing in its current form the most effective way for society to provide the most housing to the most needing in the most cost efficient way?
What I am saying is that these days much of the rental housing stock these days exceeds the requirements for a basic "roof over our heads". Many rent the best and nicest houses because of personal perference; dishwashers, arsewashers, pools, Jaccuzi's, home theature rooms etc. Not that expressing a personal spending perference is bad, if someone wants to rent a luxury house from me then great! But as a taxpayer I DONT WANT TO SUBSIDIZE their choice to live in such conditions. IMO negative gearing must be reviewed against its reason for existence...to help private individuals provide low(er) cost housing to those who most need it.
Why can't the state and fed governments be like corporations, operate under the same laws. If the NSW government was a corporation it would be hauled before the courts and jailed for 20years. Look at what they have done since the election, and the stuff they hid from voters the trains the hospitals tax increases debt recovery, In all honesty the governments of this country should be ashamed of themselves. What about those 200 odd boxes of evidence that can't be released imagine if HIH said oh no you can't look in these boxes. It's a friggin joke.
ditto for victoria
If it is not for stamp duty and traffic fines victoria would be bankrupt.
I repeat duncun's thoughts, the thought of mark latham as treasurer sends chills down my spine.
ok about this forum being in government
so far we have:
rolf - treasurer
sim - pm but declined to accept information ministry
rubi - deputy pm
asy - minister for housing
savannah - ministre for planning and design
les - minister for environment
I propose further
michael croft - PM
Geoff W - communications and chief advisor to PM
Jakk - industrial relations [ great with baseball bat]
dale - education
always learning - foriegn affairs
sunstone - health
I can't think of ay more ministries now . bed time.
If it is not for stamp duty and traffic fines victoria would be bankrupt.
I repeat duncun's thoughts, the thought of mark latham as treasurer sends chills down my spine.
ok about this forum being in government
so far we have:
rolf - treasurer
sim - pm but declined to accept information ministry
rubi - deputy pm
asy - minister for housing
savannah - ministre for planning and design
les - minister for environment
I propose further
michael croft - PM
Geoff W - communications and chief advisor to PM
Jakk - industrial relations [ great with baseball bat]
dale - education
always learning - foriegn affairs
sunstone - health
I can't think of ay more ministries now . bed time.
I was investing in property in the middle 80's when the labour govt abolished negative gearing.
At that stage I was pretty heavily negatively geared.
What happened then was that you could continue negatively gearing properties that you have bought prior to the change in legislation, but you could not write off property losses from new purchases against other income. You could carry forward the losses and eventually use them against profit from properties in future years - so you did not really loose the full benefit. It was just a timing issue.
The effect of this was a disincentive to buy invetment property and provide housing for tenants. There were fewer rental properties available, rents shot up and in general property investors who were already in the market were happy.
The legislation backfired, because the aussie battler, who the labour party were meant to represent, had to pay more rent and the govt withdrew the legislation and allowed negative gearing again within about 18 months.
I am not worried - considering that quite a few more people have invested in property now than may have during the 80's, and many more people may be negative geared in shares as well, any party that threatened to discontinue or alter negative gearing detrimentally would be committing political suicide.
I wouldn't thing the ATO would be too supportive either as I would hazard a guess that not too many people would declare their rental income if there were no negative gearing benefits! ( I sure wouldn't
Nat
I wouldn't thing the ATO would be too supportive either as I would hazard a guess that not too many people would declare their rental income if there were no negative gearing benefits! ( I sure wouldn't
Nat
Crean nearly fell over when they told him what Latham said about NG. I'd say Latham has been spanked for being a naughtly little boy and doubt they'll be keen to run any such policy at the next election. It's not like they have votes to spare.
On the affordable housing issue that people have raised (as well as some spokesman for a charity on TV the other night). If neg gearing incentives were taken away (and possibly some sort of credits introduced for "affordable housing"). Or a policy of what ever type that only assists investment in "affordable housing" how would this affect everything? What do people think?
Would it result in large numbers of average at best quality housing being the only investment option in major cities where mostl properties are NG?
Would this lead to suburbs of effectively housing commission?
What would this do to property values?
Just wondering?
MF
On the affordable housing issue that people have raised (as well as some spokesman for a charity on TV the other night). If neg gearing incentives were taken away (and possibly some sort of credits introduced for "affordable housing"). Or a policy of what ever type that only assists investment in "affordable housing" how would this affect everything? What do people think?
Would it result in large numbers of average at best quality housing being the only investment option in major cities where mostl properties are NG?
Would this lead to suburbs of effectively housing commission?
What would this do to property values?
Just wondering?
MF
If the govt could be bothered, they could provide incentives for more investment in affordable housing, but I think that if this means a compromise in quality of building infrastructure then it could eventually prove more costly that we imagine longer term.
The main thing driving housing costs is not the housing construction cost, but the land value. Builders today are more cost efficient than ever before. So to some extent I see little to be gained by focusing lower cost housing any more than necessary.
If we make houses more affordable that last 20 years less than normal, due to cheaper construction methods, one has to ask where the cost efficiency really is. I see the point, but these other factors need to be considered. In reality lower cost usually translates to lower quality. So I guess the real focus could perhaps be higher quality at lower cost through innovative design and construction. But again as mentioned, our builders are already more efficient than ever in construction methods and in any event, developers wont develop high quality properties, if there is no demand for them.
I also see the point about housing commission style lower cost developments, which I think carry many hidden costs in terms of quality of living by higher density designs. In any event there is plenty of affordable housing around, it just doesn't exist in the CBD and surrounding suburbs. This issue is not construction cost but availability of land that effects the price. But purely in terms of construction cost, cheap doesn't always mean good or livable.
I think greater decentralization of government and private public goods and services may go some way towards making living in more distant zones more attractive and affordable, due to lower land costs.
Land appreciates buildings depreciate.
The main thing driving housing costs is not the housing construction cost, but the land value. Builders today are more cost efficient than ever before. So to some extent I see little to be gained by focusing lower cost housing any more than necessary.
If we make houses more affordable that last 20 years less than normal, due to cheaper construction methods, one has to ask where the cost efficiency really is. I see the point, but these other factors need to be considered. In reality lower cost usually translates to lower quality. So I guess the real focus could perhaps be higher quality at lower cost through innovative design and construction. But again as mentioned, our builders are already more efficient than ever in construction methods and in any event, developers wont develop high quality properties, if there is no demand for them.
I also see the point about housing commission style lower cost developments, which I think carry many hidden costs in terms of quality of living by higher density designs. In any event there is plenty of affordable housing around, it just doesn't exist in the CBD and surrounding suburbs. This issue is not construction cost but availability of land that effects the price. But purely in terms of construction cost, cheap doesn't always mean good or livable.
I think greater decentralization of government and private public goods and services may go some way towards making living in more distant zones more attractive and affordable, due to lower land costs.
Land appreciates buildings depreciate.
Getting back to the thread ...
My opinion on negative gearing is that it's fundamental purpose is not to provide low cost housing, but to
(a) encourage investment amongst those who choose to do so towards the long term aim of reducing the pension drain on the government
Please keep in mind that negative gearing is simply combining income from all sources and adjusting it against expense incurred in earning that income, then paying or receiving the difference in tax for the particular tax period.
Negative gearing benefits business owners, stock & share investors, intellectual property investors etc and not just property investors.
and as a side benefit
(b) provide a variety of properties for rent including residential, commercial, industrial.
Financial issues and social issues become intermingled in the public mind if 'negative gearing' is seen as a reporting tool used only by property investors.
.....
Regarding public housing:
Initiatives in 'contributions' required from developers are no longer just open space or money. Allocations of x% of actual dwellings for public housing has been the practice in NSW and some Victorian municipalities for some time.
This is not necessarily the best socio-demographic solution. Resentment can lead to neighbourhood problems and social isolation when the Port Melbourne resident who has paid $650,000 for their apartment discovers that their next door neighbour is a public housing tenant, paying a % pro rata of their income as rent.
Other municipalities sell their allocated properties and purchase more 'appropriate' housing as required.
There is no easy solution.
Cheers
Kristine
My opinion on negative gearing is that it's fundamental purpose is not to provide low cost housing, but to
(a) encourage investment amongst those who choose to do so towards the long term aim of reducing the pension drain on the government
Please keep in mind that negative gearing is simply combining income from all sources and adjusting it against expense incurred in earning that income, then paying or receiving the difference in tax for the particular tax period.
Negative gearing benefits business owners, stock & share investors, intellectual property investors etc and not just property investors.
and as a side benefit
(b) provide a variety of properties for rent including residential, commercial, industrial.
Financial issues and social issues become intermingled in the public mind if 'negative gearing' is seen as a reporting tool used only by property investors.
.....
Regarding public housing:
Initiatives in 'contributions' required from developers are no longer just open space or money. Allocations of x% of actual dwellings for public housing has been the practice in NSW and some Victorian municipalities for some time.
This is not necessarily the best socio-demographic solution. Resentment can lead to neighbourhood problems and social isolation when the Port Melbourne resident who has paid $650,000 for their apartment discovers that their next door neighbour is a public housing tenant, paying a % pro rata of their income as rent.
Other municipalities sell their allocated properties and purchase more 'appropriate' housing as required.
There is no easy solution.
Cheers
Kristine
Peoples,
Let me just remind everyone that negative gearing has also been abolished in the US in 1986 and has not been reintroduced.
While the labour goverment reintroduced it in 1987, I would not bet my house on the fact that it will not be abolished / severely reduced in effectiveness in future, especially if either party on power needs a deal with the democrats/greens or by some silly legal interpretation!!! Regarding to latter, just think what came out by some idiots (called themselves some sort of tribunal) when in early this year they 'interpreted' what is fixture!! several millions of dollars previously shortly deductible expenses now can only be deducted over 40 years now (if at all), albeit it does not make commercial sense! Details for those who dunno about it I can recommend the API's last 3 editions.
I know, I expressed it in the past, but if someone goes purely negative geared properties (and paying every day for cap growth prospects) they will eventually;
- run out of serviceability
- take on and enormous risk completely unnecessarily as property investment can be an almost zero risk investment with the right strategies
To me personally, loosing money (even if the goverment gives back up to half of it) just simply DOES NOT make sense and I do not think is necessary. There are always deals around, just today it is maybe a bit harder to find them, but it is a business which should be run on sound priciples, NOT on hope. Otherwise I call it gambling.
Just the 2c.
Tibor
Let me just remind everyone that negative gearing has also been abolished in the US in 1986 and has not been reintroduced.
While the labour goverment reintroduced it in 1987, I would not bet my house on the fact that it will not be abolished / severely reduced in effectiveness in future, especially if either party on power needs a deal with the democrats/greens or by some silly legal interpretation!!! Regarding to latter, just think what came out by some idiots (called themselves some sort of tribunal) when in early this year they 'interpreted' what is fixture!! several millions of dollars previously shortly deductible expenses now can only be deducted over 40 years now (if at all), albeit it does not make commercial sense! Details for those who dunno about it I can recommend the API's last 3 editions.
I know, I expressed it in the past, but if someone goes purely negative geared properties (and paying every day for cap growth prospects) they will eventually;
- run out of serviceability
- take on and enormous risk completely unnecessarily as property investment can be an almost zero risk investment with the right strategies
To me personally, loosing money (even if the goverment gives back up to half of it) just simply DOES NOT make sense and I do not think is necessary. There are always deals around, just today it is maybe a bit harder to find them, but it is a business which should be run on sound priciples, NOT on hope. Otherwise I call it gambling.
Just the 2c.
Tibor
I personally think that it does NOT make good business sense for any govt to abolish negative gearing. They tried it back in the 80's and found it to be a completely uneconomical decision due to private investors bailing out of property and tenants become a liability on the public sector. It didnt take them long to reintroduce it quick smart.
Have you ever noticed the only thing that induces any sort of urgency or speed in a governement to make a decision is when its hitting them in the hip pocket. And its for this very reason I think they will not abolish it! Why would they when it is proven in black & white statisical facts , that for every $10,000 they give back to an investor through tax rebates they indirectly create or raise another $45,000 through other indirect taxes. Not a bad little business venture is it!
Why would they abolish it when theyre raising revenue from of it?
Have you ever noticed the only thing that induces any sort of urgency or speed in a governement to make a decision is when its hitting them in the hip pocket. And its for this very reason I think they will not abolish it! Why would they when it is proven in black & white statisical facts , that for every $10,000 they give back to an investor through tax rebates they indirectly create or raise another $45,000 through other indirect taxes. Not a bad little business venture is it!
Why would they abolish it when theyre raising revenue from of it?
Tibor, the message from the US may in fact not be the abolition of negative gearing but the deductability < up to a $ limit> of interest of PPOR !!!!
I'd take this in a flash, the impact of the resultant growth in home ownership would dwarf the FHOG.
What a country we have FHOG = welfare for people who can afford to buy real estate ! Yes I know the idea was to support the building industry post olympics and GST, but we could do that through specific taxes as we do in primary production.
If NG disappears, we would no doubt have to look at alternate structures and sources of income to make deductions useful to us...life would go on.
Will1
I'd take this in a flash, the impact of the resultant growth in home ownership would dwarf the FHOG.
What a country we have FHOG = welfare for people who can afford to buy real estate ! Yes I know the idea was to support the building industry post olympics and GST, but we could do that through specific taxes as we do in primary production.
If NG disappears, we would no doubt have to look at alternate structures and sources of income to make deductions useful to us...life would go on.
Will1
