Negative gearing: is it worth $3.9 billion of tax breaks?
- Thread starter geoffw
- Start date
Given that vacancy rates are < 2% across pretty much all capital cities, getting rid of negative gearing would have dire consequences.... Wonder if the SMH journalist thought about what would happen if it was abolished? I doubt it, just another excuse to have a go at property investors.
Grimey
Grimey
Tough. The govt actively made buying investment properties a good tax break. As a result, rents have been low while property prices went up. In any case, the current situation is NOT dominated by people who have multiple properties. It's about thousands of mum and pop investors who bought ONE IP.
In the same way, excess consumption is not because of a small number of people buying Ferraris, but many people buying ipods and cocktails.
Ah well. They can bleat all they want. We sit back and enjoy the fruits of our labours (the saving, the reading, actually DOING something for our futures instead of drinking it).
Alex
In the same way, excess consumption is not because of a small number of people buying Ferraris, but many people buying ipods and cocktails.
Ah well. They can bleat all they want. We sit back and enjoy the fruits of our labours (the saving, the reading, actually DOING something for our futures instead of drinking it).
Alex
Would you have a manger to spare?
We actually aren't enjoying enough fruit
the rents are TOO LOW considering today's property prices.
More and more investors are leaving the property markets daily
moving their funds into shares or super.
At the same time, many homeowners can't keep up with mortgage
repayments so they have to sell and rent.
Rental shortages are real and are only going to get worse.
I believe tax breaks are required to assist homeowners with their PPOR mortgages
and we investors we will need further incentives to convince
us to buy more properties.
Negative gearing is not enough, they could start by removing Land Tax
and stamp duty. Failure to act means that the rents will rise big time.
cheers
I guess many of us want prices to fall further (so that we buy more IP's...hehe)
Good thinking selling your shares though, but the difficulty is getting the
timing right as shares are still getting some good gains.
Cheers
What the govt SHOULD do, is give tax breaks, for example, to developers to build low-income housing. I was just reading about this LA development where rent will be subsidised for low-income earners. However, it involved a lot of tax forgiveness to the developer.
This will increase housing supply and keep rents in check. However, the shortfall will have to be made up by the govt.
With the govt bleating on and on about how they've paid back the govt debt while cutting taxes, where is the money going to come from?
Alex
This will increase housing supply and keep rents in check. However, the shortfall will have to be made up by the govt.
With the govt bleating on and on about how they've paid back the govt debt while cutting taxes, where is the money going to come from?
Alex
The problem with this idea is that we will have large concentrations
of low income people in one area.
This creates housing commision type communities with problems.
Better to give the tax break to us I think and we will buy more IP's...
cheers
The problem with this idea is that we will have large concentrations
of low income people in one area.
This creates housing commision type communities with problems.
Better to give the tax break to us I think and we will buy more IP's...
cheers
Ah, that was the interesting thing about that LA development. SOME units will be subsidised. Some (especially the penthouse ones) will be full price. These are designed by a famous architect and will, I suppose, be a nice place. I don't think they were considering really low income people: more police, nurses, teachers, council workers, etc.
Since the US allows interest deductions on PPOR, it seems there are fewer mum and pop investors. Reading the US books, it seems that they tend to talk about buying duplexes, buildings, etc. Very few talk about buying single units like we do in Oz. Yields tend to be higher because, I would imagine, you don't have hordes of mum and pop investors buying one IP each to drive up the price. Also because of the size of the market, you have more big residential investors (imagine someone owning the whole Docklands development in Melbourne, for example).
Alex
I'm just going through the vitrol-laden comments on that article now.
You know what the most ironic part is? People who own multiple IPs are in the extreme minority. Fact is, most of that $3.9b is being claimed a couple k at a time by mum and dad investors who own 1 IP and will never own more than 1 IP. Most don't even understand the significance of 'claim non-cash depreciation at your marginal rate now and only pay 1/2 your marginal tax in the future' and just give receipts to their (equally clueless) accountant.
These are usually just ordinary people who wanted to fund their own retirement, but they're being tarred with the same brush (as, well, us, if you believe accept the SMH line that we're tax cheats!). Betcha they're feeling the heat at bbqs across the country especially now that rents are rising! For me, tar away! Everything I do is legal: if people don't like it tell the pollies to change the law. Go ahead and eliminate negative gearing! It'll drive investors who bought at the peak into the ground, and we can pick up the properties, AND watch rents jump.
Alex
You know what the most ironic part is? People who own multiple IPs are in the extreme minority. Fact is, most of that $3.9b is being claimed a couple k at a time by mum and dad investors who own 1 IP and will never own more than 1 IP. Most don't even understand the significance of 'claim non-cash depreciation at your marginal rate now and only pay 1/2 your marginal tax in the future' and just give receipts to their (equally clueless) accountant.
These are usually just ordinary people who wanted to fund their own retirement, but they're being tarred with the same brush (as, well, us, if you believe accept the SMH line that we're tax cheats!). Betcha they're feeling the heat at bbqs across the country especially now that rents are rising! For me, tar away! Everything I do is legal: if people don't like it tell the pollies to change the law. Go ahead and eliminate negative gearing! It'll drive investors who bought at the peak into the ground, and we can pick up the properties, AND watch rents jump.
Alex
Getting very worked up there Alex
Seriously though, what pisses me off about this is that people refuse to analyse the taxation treatment of property in the same manner that they do other asset classes (ie. businesses and hence also shares).
Property is already taxed more heavily than other asset classes (stamp duty, land tax, etc) - the very least is that it gets the same treatment (ie expenses incurred in generating an income are deductible) as shares, business assets, etc...
If they scrap negative gearing for property it would be inconsistent with the treatment of other asset classes.
As a young(er) person I was surprised when studying tax law during my law degree how recently many "fundamental" tax rules were put in place and how often they have been changed.
As this asset class touches the (ignorant) "masses" it gets the scruting of the (stupid) mass media whereas other areas of tax law are left unexamined.
Compare rental return growth with dividend growth in the All Ordinaries over the last 10 years. Massive difference.
