Negative Gearing on chopping block

Discussion in 'Accounting and Tax' started by kamchatsky, 4th Apr, 2014.

  1. depreciator

    depreciator Member

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    The dad hadn't really thought much about it - he was just parroting the stuff on talk back radio and in the Telegraph. He went very quiet, which means when he did think about it he realised I was right. Then I whipped him at tennis which meant he had to buy me a beer. Not a good night for him all round.
     
  2. Aaron_C

    Aaron_C Finance Broker

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    I hear boomers say the same thing over and over - how are my kids going to afford a place - while their own properties are happily going up in value. I quietly tell them that their kids will inherit said million-dollar home anyway so it's not a big deal.
     
  3. HeadsOnBeds

    HeadsOnBeds Member

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    First time poster, long term reader!

    What do you think removal of NGing would actually mean.
    1. Can't claim interest at all?
    2. Can't claim any cost?
    3. Can't claim losses for the year?
    4. Other???
     
  4. NewYork

    NewYork Sparky

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    One thing that they could do to "test the waters" would be to say you can only claim X% of the deductions. It could say start at 90% and then be reduced each year for example. They could do the same with CGT - so rather than the 50% reduction, make it 40% then 30%.

    It could also be for purchases after the budget date to prevent a mass exit where people can't afford to hold negative geared properties.

    They could also say let you make a choice - either you can have the tax deductions now and no CGT reduction when you sell or you park the tax deductions and get CGT reduction (or claim held deductions) when you sell.

    Depends on what they are trying to achieve - increase taxes, slow down property growth, gain more electoral support, etc. Key is that they should not be silly enough to make a change that is going to mean increasing the number of people that are reliant on the government pension. So they would not want to discourage property investment generally but perhaps they want to discourage specific types of property investment.
     
  5. roe

    roe Member

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    From what I understand, you can booked all that but you cant claim against
    your salary, if it came out at a loss you record that loss carry forward until such time you sell your properties and offset that loss...what is left is your CG

    Loss can be carry forward for many years.

    All speculation and media comments at this stage, more infor maybe out in May budget.

    I think NG chopping will be when not if, too bigger hole in the budget.

    I reckon Tax free super for over 60 and 15% concession could be next.
    they wont get rid of it but can limit or put a cap on it and that itself can save billion.
     
  6. impala67

    impala67 Member

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    I think they will increase the GST which has been hinted at instead, & will leave CGT and property alone.

    Old money back into the cycle :D
     
  7. Dan_p

    Dan_p Member

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    If we cant claim losses, does that mean we do not have to pay tax on the income from rental properties? The idea is to make money at the end of the day and I am sure the government will still like that extra tax from people who actually profit from real estate.
     
  8. wategos

    wategos Member

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    When negative gearing is scrapped you'll still be able to claim all the deductions you do now, just won't be able to deduct it from other income

    So if you're making money from property income there will be no change. Only the speculators making a loss will have their cash flow affected but they will probably be able to deduct these losses from capital gains when they sell.
     
  9. hobo-jo

    hobo-jo Not a bear just a realist

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    Agree with this:
    http://www.macrobusiness.com.au/2014/04/more-reports-negative-gearing-is-being-looked-at/

    I think anyone trying to paint a picture where rents rise (at a capital city level) specifically as a result of a squeeze on supply (given the scenario where negative gearing can continue for new builds) is clutching at straws. Not to say they won't continue to rise as inflation continues and cost of living in general continues to go up...
     
  10. datto

    datto Member

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    Not if the boomers get one of those reverse loans where the loan is repaid upon the boomer's passing.

    Kids could miss out on a chunk of money!

    (moral : be nice to the oldies and you may get a bigger chunk lol)
     
  11. impala67

    impala67 Member

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    Wise Westie !
     
  12. Vixs

    Vixs Member

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    It's a big deal if they want to be home owners before their parents die (could be in their 50s or 60s by then easily), and have no financial assistance from them.

    Not a problem for the usual SS inhabitants, but typical Australians don't share many of the same attributes.
     
  13. mattysavager

    mattysavager Member

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    Typical Australians actually own their own home, 67% of us do. Many Australians are unfortunately lazy and feel entitled.

    If you can't afford to live in the area you like, too bad. Earn more money or make greater sacrifices.

    I believe that shelter is a basic human right, and a human dignity. Shelter does not mean a brick 4 bedroom home with garaging and very close to schools and trendy cafes. Real property in a desirable location is a luxury, and nobody is entitled to it.

    I want a Mercedes, but I can't afford one. I don't expect the government to reduce the cost of luxury items to a point at which I can afford them, just because I feel entitled to those luxury items.

    There are plenty of affordable properties in 'uncool' suburbs that young people can purchase, or rent for that matter.
     
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  14. Player

    Player Live Every Day

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    Nothing more to say.

    Kudos.
     
  15. hobo-jo

    hobo-jo Not a bear just a realist

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    If you can't afford to hold an investment property without deducting the excessive cost of ownership from other income sources, too bad. Earn more money or make greater sacrifices.
     
  16. Ideo

    Ideo Member

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    While I don't disagree with that in principle, why should the government prop up investors who make a loss from investment property using that exact same logic?

    Surely if you can't afford to keep an investment property, you can't expect the government to reduce the costs associated with it just because you feel entitled to one?
     
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  17. skater

    skater Capitalist

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    How about we remove PROPERTY from the equation. Why should one investment be treated any differently to another.

    IF, changes are made to negative gearing, it should go across ALL asset classes.
     
  18. hobo-jo

    hobo-jo Not a bear just a realist

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    I'm not opposed to seeing it removed from other asset classes.

    I ran a small business last year at a loss (more or less on purpose), which I wasn't able to claim against my regular income (it does differ between different business structures). Why should someone purchasing shares or property be able to?

    However...

    There are many imbalances in the way tax is applied.

    There are many imbalances in government assistance for a countries citizens.

    There are obviously social implications for negative gearing on property that is not the case for shares or other assets which can be negatively geared, hence understandable why it might be treated differently.

    To expect that everything should always be equal is a pipe dream.
     
  19. Aaron_C

    Aaron_C Finance Broker

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    hobo-jo. If you run a loss in your personal name as a business then you should be able to write that off against other income in that entity's name. This has always been the case unless the turnover was too small under the law.
     
  20. hobo-jo

    hobo-jo Not a bear just a realist

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    My income was too high from other sources to do so.

    Just another inequality of the tax system.

    They are everywhere though (inequalities). It is an unreasonable expectation that absolutely everything in a complicated tax system can be treated on equal grounds. Especially so when there are social impacts to consider.