Whittaker on -ve gearing

[Jas]

From whittaker's newsletter

"For years the Left have been calling for abolition of negative gearing. They should love this budget because the reduction in the tax rates will mean that the attractiveness of negative gearing will be severely diminished. Pre GST, when the top marginal rate cut in at $50,000, a person earning $60,000 a year got an effective 48.5% from the Government when they borrowed for investment. That will be just 31.5% now and this, coupled with progressive cutbacks to the depreciation rules, mean that property investment is not nearly attractive as it was five years ago. Skill in picking a bargain will now be essential."

what do people think?

Jas

 

[alexlee]

Hopefully that means the amateurs who looked to negative gearing purely to decrease their tax liability from other sources will now get out of the market. Leading to price falls and more panicking. Leaves the field clear for investors who know what they're doing.
Alex

 

[WillG]

Hi Jas,

Good points. I agree that property investment looks less attractive today than 5 years ago. The proposed tax cuts coupled with huge increases in land tax, NSW vendor tax & depreciation rule changes certainly take the shine off property investments. Will this mean more people will swithch to investing in the share market ?

What effect will these changes have on rents ?

I'm not quite sure what you mean by 'Skill in picking a bargain will now be essential'. Do you mean skill is essential to ensure decent cashflow ?

 

[agent 86]

Hi Jas,
I'm not quite sure what you mean by 'Skill in picking a bargain will now be essential'. Do you mean skill is essential to ensure decent cashflow ?

WillG,

Those were Noels words.

A86

 

[Brizzy Boy]

Hi Guys,
I have set my approach this way, I look at a prospective Ip as to what sort of Gross ROI I would acheive. Plus which is very important to me how much a week I will be paying on top of the rent taking into account rates, insurance, p/mgmt fees etc. The final figure that shows up on the spread sheet I have developed determins wether or not I buy that prospective IP.
I look at what ever tax deductions that may be applied to the IP as a bonus and thus increases my %ROI. So I do not look at negative gearing as the primary reason for buying an Ip but wealth creation in readiness for my retierment.

Regards
John

 

[Les]

G'day Jas,

Thanks for posting this - I especially loved this bit:-

For years the Left have been calling for abolition of negative gearing. They should love this budget because the reduction in the tax rates will mean that the attractiveness of negative gearing will be severely diminished.

Isn't that interesting !!! With all the current belly-aching from Labour, you'd think they were concerned with the opposite effect. (I'm talking Federal here).

Of course, Noel could be wrong (and we've had discussions on forum re whether Negative Gearing will fall into a deep hole - or not).

Perhaps we should add Noel's comment to the Negative Gearing discussion too.

the reduction in the tax rates will mean that the attractiveness of negative gearing will be severely diminished.

Regards,