From the SMH
Negative gearing: is it worth $3.9 billion of tax breaks?
Negative gearing: is it worth $3.9 billion of tax breaks?
Full StoryNegative gearing may be a better way to offset cellulite than property investments. It's kind of like having your cake and eating it too - "Hmm, if I can't make money by being a rich property mogul right now, at least I can reduce my income tax and keep my fingers crossed that I'll make money in the future."
Australian negative gearing and Capital Gains Tax laws are complex, but there is little doubt property investors take great comfort in claiming any losses against their tax. So much so, that in the 2004-05 tax year, the Australian public said ta-ta to $3.9 billion worth of deductions for rental property investors.
In today's slower property market, that tax break is possibly the only thing allowing property investors to sleep at night. Oh, and the knowledge that only 50% of future capital gains will be subject to tax, thanks to Peter Costello's 1999 changes which some experts believed added fuel to the pre-2003 property boom.
Today's news of the Reserve Bank warning of inevitable rent increases and The Age's economics editor Tim Colebatch compelling story on the distortion negative gearing gives to home prices, we have to ask ourselves -- do Australians really want negative gearing?
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