Negative gearing at risk? Fin Review article.

[Freedom]

Hi.
An article in today's Fin Review argues that the 50% reduction in capital gain for taxation purposes, is at risk if the property is negatively geared for the duration of ownership.
That if bought for speculative purposes, or capital gain, and never making a profit throughout the period of ownership - the CGT discount may be at risk.

The article also says the issue is hugely political and may not be enforceable - but does anyone have an opinion about this issue?

 

[BV]

Freedom,

Somenone who buys an IP in one of our largest cities
even if he had the most generous depreciation scheme he would find it very hard to be +ve geared

At the same time the rental market has not recovered yet,
The vacancy rates are high in some areas and that makes it hard to increase rents.

If this continues an investor would have to wait many years before his -ve geared property becomes +ve geared

I believe that the ATO correctly decided that those investors who keep their IP's for longer than 12 months should not be seen as speculators.

Here is a smh article that's worth reading

http://www.smh.com.au/articles/2003/12/19/1071337162127.html

 

[handyandy]

Hi BV

The article was going fine until you get to the following quote


"Interestingly, the report found that while Australia was relatively generous to property investors - it was the only one of 10 major OECD countries to give investors unlimited negative gearing, depreciation allowances and discounted capital gains - the biggest tax concessions were offered on owner-occupied homes. It estimated these were worth more than $20 billion a year."

I am still scratching my head as to what tax concession, apart from CGT exception, which I believe is a must or else people would never be able to move.

Cheers

 

[DaleGG]

HI

I disagree entirely.

Dale

Originally posted by Freedom
Hi.
An article in today's Fin Review argues that the 50% reduction in capital gain for taxation purposes, is at risk if the property is negatively geared for the duration of ownership.
That if bought for speculative purposes, or capital gain, and never making a profit throughout the period of ownership - the CGT discount may be at risk.

The article also says the issue is hugely political and may not be enforceable - but does anyone have an opinion about this issue?

 

[WillG]

Hi BV,

I disagree with the following paragraph ...

At the moment, we have a fairly level playing field when it comes to the tax treatment of investments like property and shares (and indeed, forming your own business). There are, of course, differences, but no compelling tax bias in one direction or the other. It would be dangerous indeed to skew investment decisions by providing such a bias.

When/if land tax is abolished there may be a 'fairly level playing field'

Cheers

 

[hwd007]

seems to me its all swings and roundabouts when you look at the longer term effects