Why negative gearing won't go

[Rolf Latham]

Reply: 1.1.3.1.1.1.1.1.1.2
From: Rolf Latham


Hi Anon

Can you please define "self serving" ?

I would have thought a public post on an open site by an identified poster would be for the good (or bad) of all, not just the poster.

Ta

Rolf

 

[WebBoard]

Reply: 1.1.3.1.1.1.1.1.1.2.1
From: Donna Larcos


I lived through the scrapping of negative
gearing. The true investors, like Jan S.
stayed in and, as somebody mentioned,
got great capital growth. The investors
who perceived the death of negative
gearing as making property unviable
pulled out in droves, rents on remaining
properties soared and public housing
waiting lists doubled in eighteen months.
Rent control? I bought a house in 1985
that had had a war tenancy in it. She was
paying about $5 a week to the previous
owner but had gone into a nursing home
when I bought it - it was derelict, no hot
water, mushrooms growing in one room
from water flowing down the walls and a
health order on it. (Yet we saw it as our
dream house ).Basically the landlords
hoped the tenant couldn't stand it any
more and would move out. How the
woman lived there in that condition was
beyond my comprehension but rent
control is what engenders some of the
slums you see in the US. Court
processes take a long time. Otherwise
you get out and look for greener
investment pastures and the Govt has to
come up with building costs for public
housing again - NOT HAPPY JAN!!!

 

[Waverlybay]

Reply: 1.1.3.1.1.1.1.1.1.2.1.1
From: Waverly Bay


I guess it is not out of the question for legislation to be introduced requiring taxpayers to calculate a "basket" of losses which can only be offset against rental income. I understand that the tax act requires "baskets" to be kept for foreign losses (which can only be offset by certain foreign incomes). Even cap losses have to be quarantined for offset against cap gains.

So if I read Kevin/anon's suggestion correctly, the proposed taxing environment would see a taxpayer lodging a tax return and declaring their net salary/business income....and then separately on the return keeping a running balance of IP losses to be offset only against rental income. The prior year IP losses would only be utilised when Current Year Rent exceeds Current Year IP expenses.

God forbid if we ever going down this route ! This sort of "half-way" house solution can breed a compliance nightmare for some of us: would you have to apportion your telephone expenses between a business use (where the expense would be fully offset against current year business income) and an IP use (where the expense is carried forward for offset against future rental income)? Ditto for other expenses having a business/IP usuage: computers, cars ? I thought apportioning between a business and non-business use was hard enough (remember those ATO rulings on LOCs?).... but to go one step further and require an apportionment between an IP expense and business expense would be too much for me. Just a thought.

For me personally, the unpredictability of govs means one can't rule out neg gearing being abolished. But if they did abolish neg gearing it would hardly be the most profitable tax raising exercise. The taxing environment today is SO much more complex than the mid 80's (when neg gearing was last abolished). A heap of tax changes have taken place since the mid 80's which has meant that the tax base has been broadened in a massive way. So why go after the hip pocket of the mums and dads ....when there are bigger fish to catch, like multinationals and ......barristers? Check out the following link !
http://www.smh.com.au/news/0111/22/national/national11.html

Cheers

Waverly

 

[SueJ]

Reply: 1.1.3.1.1.1.1.1.1.2.1.1.1
From: Sue J


I remember a couple of years ago my accountant telling us one of the things the government was looking at was to keep neg gearing but not allowing claims for the first property. Subsequent properties could be claimed as neg geared though.
Lets face it ...who knows what they will do in the future...it changes all the time
Sue

 

[WebBoard]

Reply: 1.1.3.1.1.1.1.1.1.2.1.1.1.1
From: Sergey Golovin


Waverly,

They had chance before they introduced GCT to tax 100 multinationals by $100 million each and it will give them $10 billion in revenue per year.
As soon as multinationals did learn about it they put their machine into gear and now everyone I'll say it again everyone in the country are paying 10 cents on everything and everyone watching each other to make sure that they are actually paying that amount.

So, talking about multinationals and taxation...

Serge.

 

[WebBoard]

Reply: 1.1.3.1.1.1.1.1.1.2.1.1.2
From: The Wife


Oh goodness me Waverly,.... bigger fish to fry?....multinationals and barristers?......talk about the one that got away!

TW
~Life is a daring adventure, or nothing at all~