Negative Gearing

Hi,

My name is David Mark. I'm a journalist at the ABC doing a piece for ABC TV on negative gearing. I'm interested in interviewing any investors who may have properties and take advantage of the negative gearing tax laws. Basically why? and what is your take on the debate about negative gearing? If anyone is interested my email is mark.david@abc.net.au
 
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There is a lot of noise recently about NG, and the supposed negative ramifications of it.

But, most folks here are investors who support it and use it as a tool towards their goals.

I listen to ABC radio at work, and am aware of their bias and leaning on many issues.

It's a disgrace - we pay for unbiased coverage and get nothing like that on many issues from your station.

I would not be involved in anything ABC wants to run unless there was an equal number of Lib and Labour reps on a panel on your show - unlike Q&A and others.

Your CEO is a disgrace and should be sacked.
 
Hi Bayview,

I'm interested in all views, but definitely want to hear from investors who are supportive of negative gearing. I'm aware of the negative comments around, hence my interest in posting to this forum where, I presume, most people are more positive.
 
Not terribly fussed on whether it stays or goes as my properties make a profit.

However, I think the whole issue is a scape goat. Negative gearing isn't actually causing the problems they think it is, it's just easy to present to public.

As is typical with ABC though, we'll probably get some aussie battler perspective.
 
http://somersoft.com/forums/showthread.php?t=108177

There is a good place to start of a recent discussion about it.

Negative gearing is similar to business that can write off their losses against tax.

Investors do not go out to buy a property looking at losing money but it helps with servicing and making their money go further.

My feelings is if you remove neg gearing the investors will move away from property OR will have to increase rents to compensate for the extra charges they have.

If they move out property prices may fall however as people wouldn't have a deposit to buy a house or the ability to service a loan (casual employment). This will leave them in a situation where the government will need to provide more public housing which will cost the tax payers more money or there will be more people on the street and potentially crime would go up. With the lack of public housing this will create more demand for rental properties which in turn will increase the rent for landlords who have held onto their property.

I cant recall where I read but for every $1 the government gives back in negative gearing they receive back $5.

Not saying the government wont change neg gearing but abolish it would be stupid as the government are making ALOT of money from having it in place and also outsources the housing away from the government.
 
Not terribly fussed on whether it stays or goes as my properties make a profit.

However, I think the whole issue is a scape goat. Negative gearing isn't actually causing the problems they think it is, it's just easy to present to public.

As is typical with ABC though, we'll probably get some aussie battler perspective.

Or not. I'm interested in speaking to anyone who negatively gears. I'm not looking for a type.
 
I think you'll find that most property when purchased is negatively geared (assuming your borrow 100% of the purchase price). It's not a choice, it's simply a market reality as the rental yield needs to be at least 6% or more to cover the ongoing costs.

Certainly people actively aim for positive gearing on this forum, but that's the goal, not the reality. My observation is that those who are early in their investment journey are negative geared, whilst those who've been doing it for many years are either neutral of positive geared. In some instances this comes about due to creative and savvy investing. For most it's simply because rents tend to increase over time.

You'll find that those with the aim of negative gearing to 'save tax' tend to be less educated than most people on this forum, but despite this, most people on this forum are in favour of negative gearing. I'm in favour of negative gearing, even though my own portfolio is not at all negative geared.

I'd be happy to support a balanced and unbiased article that actually discusses what negative gearing really is and what the effects of it are on the various demographics that own, invest or rent property might be. Unfortunately I agree with BayView, I don't think the ABC has any interest in writing such a story.

Personally I don't care one way or the other, but any changes need to be applied to the tax code in general. Don't restrict changes to property, any changes should apply to all asset classes, including shares, managed funds, cash and business. Gearing is not restricted to property, rather property is simply the most visible asset class to employ it.
 
Like D.T., changes in negative gearing won't really affect me, but I have a real issue with talks about negative gearing because so many people see it in a negative light.

Negative gearing is available for any business or investment. Why is it that as soon as you talk about property, all the non-investors get their knickers in a knot & sprout how evil it is?

The fact is, that many investors are subsidising the cost of housing for tenants, often at great personal cost, while they wait for rents to go up and/or their property to appreciate in price. So, as an incentive, to keep the private sector buying properties to rent out, the government throws a bone in the way of allowing negative gearing. What's so wrong about that?
 
Negative gearing tax concessions are only one part of the story.

With stamp duty , land tax and capital gains I'd say that in most instances the property pays its fair share of taxes.

I know that is the case with our Sydney properties.
 
Speaking with people will get the emotion involved, particular and individual situations, but truth will play second fiddle.

If you can find a suitable matured researcher, then it may be possible to get a wider and possibly correct technical view.

Many people say do away with negative gearing, be like Europe. So, why not get some academics to discuss European and Australian differences.

IMO, investigating these angles may be interesting:

- with NG - spread of middle class and reduction of inequality, consequently reduction in dependence on government welfare

- without NG - growth of rental lords, entrenchment of long-term tenancy, higher rent in urban areas

- with and without NG - immigration affecting affordability, comparing Canada, NZ and Australia

- NG and state housing. Is it a subsidy? Who benefits - states with taxes, tenants with lower rent and better maintained properties. NG on established and new properties - important to make this distinction?

As you can see NG can be complex. It depends what you hope to achieve - emotion or facts.
 
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The fact is, that many investors are subsidising the cost of housing for tenants
This is a critical point. My tenants who are saving for a deposit love -ve gearing - for them it means that the govt & landlord are subsidising their rent allowing them to save more faster.

If -ve gearing were to be removed, they may well be a price stagnation for a period while the market readjusted.

However, the longer term effect would be to ensure a that there were fewer rental properties available, consequently rents would rise, and the next generation of FHB would find it a lot harder to save for a deposit.

Bottom line - short term it may help current FHBs, longer term it would essentially lock a large number of FHBs out of the market.

And of course the other major point is that it all balances out eventually - landlords receive a small refund for the 1st few years, pay a small amount of extra tax when it becomes profitable, and larger tax bills for the remainder of the term.
 
Thanks for all the replies.

I should have said up the top that I'm doing a piece for 7.30 on ABC TV - so I'm looking to do an interview on camera with a property investor. As I said previously no agenda - just want to hear your side of the story. If anyone is willing please get in contact: mark.david@abc.net.au
 
Thanks for all the replies.

I should have said up the top that I'm doing a piece for 7.30 on ABC TV - so I'm looking to do an interview on camera with a property investor. As I said previously no agenda - just want to hear your side of the story. If anyone is willing please get in contact: mark.david@abc.net.au

I hope someone comes forward for this. We are all bitching about ABC not reporting a both sides and now we are given the opportunity and nobody is willing.

If i was a more suitable candidate and lived in Sydney I would be happy to be interviewed.
 
I listen to ABC radio at work, and am aware of their bias and leaning on many issues.

It's a disgrace - we pay for unbiased coverage and get nothing like that on many issues from your station.


So why do you keep listening to it ?

Plenty of other choices.

I agree with you but I vote with my feet.
 
I hope someone comes forward for this. We are all bitching about ABC not reporting a both sides and now we are given the opportunity and nobody is willing.

If i was a more suitable candidate and lived in Sydney I would be happy to be interviewed.

I nominate Bargain Hunter.
 
So why do you keep listening to it ?

Plenty of other choices.

I agree with you but I vote with my feet.
No ads, and it's funny to get the Lefty BS side of things...

Then; tune into AB on Channel 10 on Sunday (recorded of course to avoid 10's ream of disgraceful ads as well) to have a chuckle and smirk at how disgraceful the ABC in its various forms was during the week. LOL..

Don't start me on Q&A...

You can bet your @rze that if the 7.30 Report does this topic, it'll be half a dozen Gen Y's crying in their beards about how impossible it is to buy anything, and the reporters will accentuate on the evil LL factor, and chuck in a couple of bunnies from SS to support that end, and make them look like tools and arrogant rich c*nts..

It'll be a Lefty sook-up against the evil LL's for sure.

I'd almost guarantee that.

Happy to be proved wrong (but I won't be).

David Mark; how in the hell do you and your pathetic ABC buddies sleep at night?

Call yerselves "objective journalists"...pig's @rze.

How's Paul Barry going?

Jeezus H.

And the sad thing is; we taxpayers are paying you for your disgraceful biased journalism.

I'll go on their stupid show, but I'll bet I get edited out quick smart...

I'm almost warmed up now, Devank.
 
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I am totally for neg gear. The taxpayer and the tenant pay for most of property and running costs. Come property boom time, you clean up..... how could anyone be against it? unless you're not a property investor.

It's too easy. Even a bogan can do it. All the talk against neg gear is sour grapes.

I will only go on camera under a silhouette profile and also my voice has to be altered to a high pitched staccato lol.
 
I have 2 negatively geared properties. They are negatively geared because they are potential development blocks, which means older lower renting houses but a higher purchase price because of the development potential. They were losing a ridiculous amount every year but that has dropped a lot with the lower interest rates.

I am working with a builder now to develop the first one and will develop the second one after that. After development, both will be cash flow positive. I didn't buy the properties to negatively gear them. I bought properties to develop and used negative gearing to offset some of the holding costs while I get the developments sorted.

Not interested in going on tv though :p
 
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