Who does it benefit?
Should a average income (60k-75k) should look into it?
What is negative gearing?
d-hunterz on 20/05/2016 - 16:50
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You need to speak to a good tax accountant who will hopefully have the benefit of your entire financial picture, not randoms on OzB who do not.
Positive gearing is where it's at. Find a quality investment that can grow its income over time so that is not only paying for itself but also putting money in your pockets. If your growing your income then the capital gains will follow.
When you have don't have substantial capital you can't positive gear anywhere in this country.
Bit of a broad statement there….
My share investment loan is positively geared. And I started without any capital. Dividend returns are more than the interest I pay so I make a tiny profit then claim back the interest as a tax deduction.
We are talking housing here. Keep it in context :)
Can someone shed some light on likely scenarios after negative gearing and how would it affect housing affordability for working people trying to save money to buy or put a deposit towards a house.
same here , trying to save up to buy a house…may start a new thread..
Overall, its not just negative gearing that you, a potential owner-occupier is coming up against.
In general, an investor competing against an owner-occupier has the advantage of deriving an income from the investment.
Negative Gearing and the 50% CGT discount sweetens the deal the potential investors in certain circumstances and, considering this, some investors may wish to pay a bit more for the same property than owner-occupiers.
get interest only loans on everything with offset accounts, and be prudent with your savings.
that way you can switch between properties as you chose, and just migrate the savings from one ppor offset to the new ppor offset.I haven't been following the political stuff for a while (seriously CBF with the bs) but have either party mentioned whether the proposed changes would affect investment loans for things other than housing e.g. shares? or will it be the same rules for all investment loans?
Sounds it's just housing for now, but in the spirit of give an inch, take a mile, it will probably be on the cards in future if this passes through.
Only trust independent unbiased information (at least to me)
http://www.abc.net.au/news/2016-04-29/potter-negative-gearin…
Many other sources tends to be biased (to what majority believes and like to see)
Whilst I agree with the article (and have been trying to argue the point that removal of negative adversely affects the middle income and lower incomes the most)..
The point made about negative gearing by a non working spouse seems to be an illogical concept to me and probably not a realistic situation in my eyes. For the most part, if in Vic at least, it would make more sense for the working spouse to maintain the payments up to and beyond positive gearing, and use a love and affection transfer to the non working spouse. (stamp duty would be payable).
I've always held the view that even if direct housing negative gearing were abolished, the well off have other alternative mechanisms to create a 'negative gear' scenario if they have structured their portfolios wisely. The poor don't have the capital to use the other alternatives that are open to the already well off..
An abolishing would only prop up those who are already in market, (and those who already have significant savings) whilst at the same time effectively closing the doors of those who barely have enough to get in.
I am not at the top bracket of the tax system and I understand for those who at the top bracket - most work hard to reach there and they deserve it, without those people subsidizing the lower end, the country will not function well.
Some simple example
http://www.fortunewatch.com/the-obama-tax-system-explained-i…That example is over simplified and clearly biased.
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You are are making $500 a week in the scenario you describe here (as the $380 repayment is irrelevant for tax purposes as principle/capitable repayments aren't deductible)
Only the interest portion is related to negative gearing. Even if you removed the entire $300k from the offset, assuming that $500/pm rent is fair market rate for the property then the probability is that it will be positive gearing.. (or close to, if you factor in other relating expenses)
Also sounds like you are trying to use the 6 year rule with the ppor. Make sure you truly understand the fine print of it.. because where you currently live might also impact on whether you are eligible.