The Abolishment of the Negative Gearing Debate

Around 2 Million property investors around Australia that used negative gearing last year, would find great relief this week to hear our Prime Minister Julia Gillard will not remove the Negative gearing tax breaks for property investors . Adding to this news on top of the already low interest rates, great rental returns and higher yields, will create even more confidence in the market place.

Gillard says her government has ruled out removing the tax break. It was in response to a question asked on the ABC’s Q&A program. “We didn’t agree with the Henry Tax Review,” Gillard said, “We think that an abolition of negative gearing will cause distortions to the property market that we did not want to see,” she said.

The federal opposition also appears loath to remove the tax break, with Coalition spokesman Joe Hockey tweeting after the broadcast that negative gearing “holds down rents... just ask Bob Hawke and Paul Keating. They tried to get rid of it and reversed their policy.”
 
No chance it being abolished. Labour doesn't want to smash the battlers and Liberals don't want to smash the mum and dad investors.

Only chance would be if the Greens got a majority somehow.
 
Govt indirectly collects another $4.50 in tax from every $1 it pays to an investor for negative gearing benefits. I dont know about you but that sounds a good revenue spinner to me into the govt coffers.
 
Govt indirectly collects another $4.50 in tax from every $1 it pays to an investor for negative gearing benefits. I dont know about you but that sounds a good revenue spinner to me into the govt coffers.

Uh would you care to walk me through that?
 
Yes, for every $1 they pay an investor in a deduction they indirectly collect $4.50 brought about by the additional taxes in relation to housing construction, stamps, pay rolls, GST, all the way down the line etc etc, to house people who rent..
 
I was around when the neg gearing was abolished in the 80's...

They re-instated it a few years later.

I wonder why? :rolleyes:
 
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Yes, for every $1 they pay an investor in a deduction they indirectly collect $4.50 brought about by the additional taxes in relation to housing construction, stamps, pay rolls, GST, all the way down the line etc etc, to house people who rent..

I've seen this previously also. Do you have a reference, though, as to how this was worked out? Cheers.
 
I was around when the neg gearing was abolished in the 80's...

They re-instated it a few years later.

I wonder why? :rolleyes:

vote buying and pressure from the reia. It was reinstated after two years as part of an election promise.

rents only rose sharply in two capital cities. If removal of NG causes rent increases you would expect to see it everywhere. CGT was also introduced a few months after NG changes, which would have spooked a lot of investors. No one has whined about price drops, so i assume they didn't happen(?).

NG was 'grandfathered', not abolished. Two years is a blink of the eye in property investing terms. The removal of NG did not exist long enough to determine what it did to rents or home prices.

If NG was abolished now i would expect grandfathering. it would take a ~property cycle to sort out the influence. I would expect positive pressure on rents and negative pressure on home prices.

Having said all that, i don't expect any changes to NG. It's a vote loser and political suicide.
 
How would that knowledge assist you Redwing ??

Personally knowledge-wise, probably not one iota other than satisfying a query :D

Professionally and as part of a property investor group it would be great to see that they have a dog in the fight ;)

After all the six (6) year PPoR exemption was put in place as that was the average overseas posting period for a politician
 
as to how their self interest determines their voting intentions.

I think that is patent nonsense. The pollies would vote along party lines. I don't see many pollies crossing the floor on any issue....in fact, in the last 2 years, I haven't seen one do it.

I think your comment reflects more on the general voting population....and why not, it's human nature to further your particular cause, whatever cause that may be.

How do you vote Ed ?? Do you support every motion that is detrimental to your finances ??
 
I was around when the neg gearing was abolished in the 80's...

They re-instated it a few years later.

I wonder why? :rolleyes:

Yes...and not only did they reinstate but they also increased it to entice the investors back into the market as quickly as they possibly could.
 
I've seen this previously also. Do you have a reference, though, as to how this was worked out? Cheers.

Not at hand without searching for it again. It was in a report on a govt expenditure website. There was article in the newspaper they directed me to it.
 
Sydney mining herald – what housing policy?

http://news.domain.com.au/domain/ho...policy-20120621-20pcl.html?rand=1340238760048

June 21, 2012 – 11:22AM

Hard to see what this article is about.

Perhaps it is about old delusion that if we get rid of investors – it would drive house prices down.

This delusion based on false premise that tenants that rented that investment property disappear in the thin air.

Ok, lets imagine we get rid of negative gearing. Lets assume that you are correct that “downward movement” in median price is not caused by people snapping bargains and keeping away from expensive property.

Lets even assume that getting rid of negative gearing would drive house prices down.

Then every investor in their right mind would sell their property – no one does investment for charity.

Yes – many properties will appear on the market. But because it will become impossible to rent – there will be as many buyers forced out to the streets – and onto the market.

But that will be an ideal situation. You need not much imagination to imagine how many people share rentals. But how many actually tolerate strangers in their own houses? People would not do sharing to what they own.

It do not need to be Einstein to see that result of NG abolition would be creation of unprecedented demand for housing.
I can’t wait until actually some Government loses their mind and commits political suicide by doing that. I very much like the idea of doubling the price of real estate in a space of 6 to 12 months.

Bring it on!
 
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The Governments in all states have another problem PUBLIC HOUSING Look at the waiting lists now what would happen if they got rid of Negative Gearing
The Greens attitude to anyone making money is a Capitilist and I dont understand why they dont call themselves Socialists never mind the risks people take who buy ips
You are helping the Government by putting families in homes
IP investors should feel very satisfied providing housing for people
 
Negative gearing has robbed tens of thousands of families from owning their own home & given them to subsidised speculators instead. The arguments here in favour of it are a joke, 95% of speculators buy existing homes.
 
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