Hi all
We're all familiar with the qualitative arguments why the government won't abolish negative gearing - how it would lead to rents increasing dramatically, lower the values of houses, yada yada, yada.
However, I'm curious, purely out of personal academic interest, whether anybody has done any proper empirical research into the true direct cost to the government of negative gearing.
I know the ATO periodically publish the amount of property deductions claimed against income along with the level of property capital gains declared, and of course the deductions always greatly outweigh the gains.
But, I haven't seen anyone factor what to me are the two main offsetting items:
1) the stamp duty and land tax paid to the states on the purchase and holding of investment property - without such duties, they'd require more federal funding; and
2) the tax paid by the banks on the interest income they receive from investors, although as they borrow a lot on overseas markets it's probably more accurate to look at the tax on their margins.
Have you seen any research on these items, or any other direct items which reduce the net cost to the government? (Or dare I say it, increase the net tax take to the combined governments!)
Cheers
Jonathon
We're all familiar with the qualitative arguments why the government won't abolish negative gearing - how it would lead to rents increasing dramatically, lower the values of houses, yada yada, yada.
However, I'm curious, purely out of personal academic interest, whether anybody has done any proper empirical research into the true direct cost to the government of negative gearing.
I know the ATO periodically publish the amount of property deductions claimed against income along with the level of property capital gains declared, and of course the deductions always greatly outweigh the gains.
But, I haven't seen anyone factor what to me are the two main offsetting items:
1) the stamp duty and land tax paid to the states on the purchase and holding of investment property - without such duties, they'd require more federal funding; and
2) the tax paid by the banks on the interest income they receive from investors, although as they borrow a lot on overseas markets it's probably more accurate to look at the tax on their margins.
Have you seen any research on these items, or any other direct items which reduce the net cost to the government? (Or dare I say it, increase the net tax take to the combined governments!)
Cheers
Jonathon