Negative Gearing on chopping block

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

  1. chilliblue

    chilliblue Member

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    I agree wholeheartedly. Unfortunately the majority of voters hold shares through their superannuation funds so any govt would be reluctant to do so.
     
  2. wategos

    wategos Member

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    None of them are negatively geared so it's not an issue.
    Even people who have margin loans are usually pretty conservative with LVRs under 50% and would not be negatively geared. The vast majority of people negatively geared are investing/speculating in property.
     
  3. Aaron_C

    Aaron_C Finance Broker

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    If I run two businesses - one losing money and another making money - I can definitely offset those off in the same entity. If I did it in my personal name I don't see why that would change.
     
  4. chilliblue

    chilliblue Member

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    Correct but the average voter is not that smart and the mention of something changing to share investment could spook them.

    I believe that less than 8% of the population are investors so any changes to investment property would be more attractive.
     
  5. Paul@PFI

    Paul@PFI Tax, SMSF & Planning

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    No. That what everyone thinks now. Back then it has little to no impact of rents or prices (Sydney rent rose marginally). Reality was 6 mths later Keating introduced CGT. That caused investors to trigger sales to get their tax free out.
     
  6. baby blue eyes

    baby blue eyes Vicki

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    But those pre sep 85 properties / assets were forever quarantined, no need to get their tax free out
     
  7. rooky

    rooky Member

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    Negative Gearing

    Hi All,

    What's your view regarding impact of negative gearing on house prices? Most of users here have significant investment in residential realestate. I am reading some reports in newspapers that government may either completely abolish negative grearing or limit it only for new dwellings or may reduce it. I am not concerned for immediate period because Abott government is going to include negative gearing in its upcoming Tax White Paper and take it to next election to get public's approval.

    I want to know your view about 2 things.

    1. What is likelihood that negative gearing will be changed?
    2. What impact it will have on Australian Housing market, if its changed ?

    Rooky.
     
  8. FelixL

    FelixL Member

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    Very unlikely to happen. Previous govt done that before in the 80s and got hammered. Need a PM thats super solid in the polls. Abbot at this stage still try to prove credibility, can't see him take such a gamble

    Very difficult to implement because other business/investment activities can negative gear, hard to enforce on just property investment. They will need to grandfather existing investors, which will be an accounting nightmare imo

    If NG is abolished, because rental yield still quite tight, it is likely rent will increase quite a bit. Then it will drive tenants to either become owners, or complain to no end and forcing govt to revert decision
     
  9. impala67

    impala67 Member

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  10. Peter_Tersteeg

    Peter_Tersteeg Finance broker/strategist

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    Negligible chance that there will be changes.
    * NG doesn't just apply to property, it's also used in business, shares and every other form of investment.
    * It would be political suicide. Anecdotally most forum members appear to be Liberal voters, I don't see the current government changing it.

    In the long term, the overall changes to the housing market will also be negligible.
    * About 70% of homes are owner occupied. What do they care?
    * Most investment properties are actually positive geared. Negative geared properties tend to be owned by people actively building a portfolio. Many investors are older, with little to no debt. They're not going to sell.
     
  11. roe

    roe Member

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    I believe NG term is referring to someone offsetting an investment loss with PAYG salary (be it properties, shares or other asset)

    Running a business, pay interest on cost of debt, deduct and offset loss from one business to another isn't consider NG and this will stay on...

    What they targeting is people offset loss with PAYG salary/tax deduction.

    Whether they will implement it or not is another story, as it stands it is just a discussion bring up by journalist and commentators... I haven't read anything any where regarding the government considering a move on it but all will be reveal on 13 of May
     
  12. economist99

    economist99 Member

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    This discussion is so interesting. I don;t see it that way at all.
    I always had positively geared IPs and never had a high income.
    So I never used NG at all.

    I think it should be scrapped, along with stamp duty on PPRs, as I see housing as ahuman rights issue. A LOT of renters would love to buy but are priced out - and when they go to buy they are competing with boomer investors - sad. Very sad.

    The pride and self respect a person gets from owing their own home is HUGE and should be encouraged by the Govt at any cost.

    As a property investor I would still be very active as like I said I positively gear, even in difficult markets like inner Sydney - by being creative.
     
  13. Aaron_C

    Aaron_C Finance Broker

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    Every auction I go to in the SE of Melbourne has been won by a baby boomer with his 30-40 year old son/daughter. If that person was renting before then they are not priced out.
     
  14. HiEquity

    HiEquity Member

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    That's gotta be the first time I have ever heard home ownership referred to as a "human right", to be pursued "at any cost".

    What next, computer ownership? Car ownership? An NBN connection? A holiday house in the country? Or something else that billions of people on this planet don't have and are pretty unlikely to get???

    So much for life, liberty and the pursuit of happiness I guess... the world is either going mad or I'm the only crazy person out here! Or it's all a joke and I'm the only person who doesn't get it? :confused:
     
  15. economist99

    economist99 Member

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    HiEquity - Housing IS a human right. It's not some silly dream I came up with. I have a PhD in human rights. If you need further proof here it is from the UN, the same folk who, um, legislated the concept of human rights:

    http://www.ohchr.org/EN/Issues/Housing/toolkit/Pages/RighttoAdequateHousingToolkit.aspx

    Housing is not a f-ing material acquisition like a computer or a car FFS. It is a basic necessity. It is not even a secondary human right, it is a *basic* human right, like clean water -- but again billions of people do not have clean water.
     
  16. HiEquity

    HiEquity Member

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    Of course access to housing is a human right. Like food and water.

    Ownership of housing is most definitely not a human right. If we go down that path, we will end up in a completely socialist state.

    If you're concerned with access to housing as a human right for those least able to afford it, then policy measures that reduce the cost of rent have to be our number one priority. If someone is even considering the possibility of owning their own home, they are already a (first) world away from any reasonable discussion of human rights. Just like the right to own consumer goods!
     
  17. skater

    skater Capitalist

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    Agreed!

    I'll also add that access to BASIC housing is a human right. It does not need to be a 4 bed mcmansion with three bathrooms & a triple garage. Nor does it need to be filled with new expensive furniture.

    Basic shelter! If you want more, you should expect to work hard to pay for it.
     
  18. Player

    Player Live Every Day

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    Definitely agree.

    Here's an opening post from a thread I started four years ago, that ended up being closed due to going off the rails:

    http://somersoft.com/forums/showpost.php?p=655491&postcount=1


    The data is obviously a little old now, however the notion that we all "deserve" home ownership as some sort of right or constitutional entitlement is not a human right IMO. Shelter and housing of some description is a human right....not actual ownership.
     
  19. perthguy

    perthguy Member

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    I agree that access to housing is a basic human right. There is a lot more we could do. e.g. it water speculated by a water provider in 2012 that 6% of homes in melbourne were vacant. At a guess, this could be as many as 90,730 vacant properties in Melbourne alone. That is a LOT of housing that could potentially be used to home people.

    http://www.prosper.org.au/wp-conten...ip_Soos_Speculative_Vacancies_2012_Report.pdf

    Vendor finance
    Rent to buy
    Shared Home Ownership scheme (WA)
    Keystart

    The Shared Home Ownership scheme allows purchasers to buy a share in a property with the government as the other owner.

    http://www.housing.wa.gov.au/sharedstart/Pages/default.aspx

    Keystart allows people on lower incomes to access a low deposit home loan for owner occupier purposes.

    http://www.keystart.com.au/home-loans/
     
  20. hobo-jo

    hobo-jo Not a bear just a realist

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    Home ownership is not a human right. Neither is a tax system which treats all assets exactly the same for investment purposes. Though if you listened to those in the thread with self, social or political interest in government decisions around either, you would think that it was the case.

    I think investors need to understand that society expects government to play a role in equalizing imbalances. There is clearly an imbalance which has formed in property (especially so in Sydney):

    http://www.macrobusiness.com.au/2014/04/sydney-housing-speculation-goes-bananas/

    [​IMG]

    I can just picture a news article posted to Somersoft which detailed how speculators are hoarding fresh fruit & veggies, doubling the price for consumers. Some here would be saying, "Well food may be a human right, but why do they need to eat fruit & vegetables when they can survive on two minute noodles or rice?".