Is this a good time to end negative gearing and taxpayer subsidised speculation in housing?

Is this a good time to end negative gearing and taxpayer subsidised speculation in housing?

https://johnmenadue.com/a-good-time-to-end-negative-gearing-...

What do you guys think?
Will you give a vote for those who dare to cut a slice off Australia "sacred cow" and make the "under-water" investors pay their fair share of taxes?
The Federal election is looming and I am in touch with my area MP about this to hear her thoughts. If you support the idea, reach out to your representatives and let them know.

The funny part is that our brilliant-minded government used the taxpayers' money (real taxpayers who support this country) and poured it into the mud speculation that supported the non-taxpayers to increase the value of their investments through:

  1. TFF that basically gave banks $200 billion (with a B) free money to give away in ultra-low finance
  2. Home-grants to FHB that only poured fuel to the bonfire (and who have been front-run by investors buying sight unseen to then re-selling to FHBs)
  3. Generous "improvement" grants to increase the value of property at taxpayers expense
  4. Various stamp-duty concessions
  5. Finally, VIC government now is an official buyer of properties (you must be kidding me - state use taxpayers money to prop up the overvalued properties?)

Poll Options Sat, 01/01/2022 - 00:00

  • 129
    Yes, scrap the Negative Gearing for all (new and existing) investors
  • 16
    Yes, scrap it but only for new investors (leave it for existing)
  • 16
    No, our economy will be annihilated if we scrap Negative Gearing
  • 11
    No, I am an investor myself and my vote is against scrapping these policies

Comments

  • +6

    Yes, multiple properties is great and all but at the expense of someone not being able to own/priced out of the market.. hmmm

    • Agree, but no so much regarding "at the expense of someone….". The government-subsidized speculation is happening at YOUR expense (and mine as well)…
      ALL of taxpayers pay for these "incentives" and I think that money could be well used elsewhere - at schools, for instance, at hospitals, building new roads and new train infra for crying out-loud.

  • +2

    So, if these horrible speculators no longer have the incentive to invest in property have you ever thought about the flow on impact on rental property availability and cost?
    As usual, people tend to take a very shallow and narrow point of view on this issue - depending on which side of the fence they sit.
    Those that can invest and those that wish they could invest

    • +7

      So, if these horrible speculators no longer have the incentive to invest in property have you ever thought about the flow on impact on rental property availability and cost?

      Funny that neg gearing supportings keep claiming this but housing only went UP after neg gearing was introduced…..

    • +19

      Or you know… they might be able to buy their own property and not rent at all. Crazy thought huh?

      I have nothing against buying multiple properties but it shouldn't be incentivised by the government.

    • +2

      It’s funny, taking investors out of the market doesn’t mean there will be less rentals out there. It will mean there’s more owner occupiers.

      • +1

        It won't be one-for-one. Many people have to or choose to rent. Anyone who has to move regularly for their job, or doesn't want to be tied down to one place for the long term, or anyone who doesn't yet have a house deposit saved, or anyone whose income is not regular enough to get a loan. I do agree there should be less incentives for investment, but it has to occur in conjunction with more investment in social housing (or change incentives from encouraging mum-and-dad investors to encouraging large corporations to invest in big apartment blocks like in Europe), and be very gradual. Any large changes that cause a mass exit of investors will cause a spike in rental prices which would be disastrous for anyone who can't immediately buy a now cheaper house or who doesn't want to.

        A good change for them to make to start with would be enforcing higher minimum standards for rental housing, and giving renters more rights (renters shouldn't be afraid to report problems because they might get kicked out at the end of the lease). Would both make investment less lucrative (if the house might have to be unoccupied for six months while mould problems are fixed or better heating or cooling systems are installed etc) and make renters lives more comfortable. Those awful mould-filled houses would be cheaper too as no investor would want them (wouldn't be allowed to lease them until rectified) and the eventual owner occupier could spend the money to fix it as it is their house not a landlord's.

    • +3

      Eeehhh, rental vacancies are at all times high (3% in Sydney) and that is official stats, unofficial I think is higher. I think the market can survive the REAL price discovery.

      Worst case (best case in my view) all the bonfire money are much better to be spent on social housing and affordable "built-to-rent" owned by government.

      Instead MY tax money is given away to those who can't even put a profitable business together, let alone from multiple attempts (properties).

      After all, we are not talking about eliminating the investors (as your post implies) - by all means let them invest. I am against the whole society PAYING for their "negative" business.

    • +1

      flow on impact on rental property availability and cost?

      Rental property isn't needed as much if ordinary people can afford to buy housing.

      When I was a 4th year apprentice in 1983 I could afford to buy a 40 year old 1 bedroom unit with no parking and a shared laundry on a main road under a flight path (so it was all fairly crap). That's impossible these days.

      • +1

        1983 I could afford to buy a 40 year old 1 bedroom unit

        Your fiat money was worth 3.33x more in 1983 compared to 2021.
        https://www.in2013dollars.com/australia/inflation/1983?amoun...

        The smart money nowadays isn't holding fiat. They buy up every asset under the sun to short fiat to the ground. People that aren't doing the same will see their fiat savings shrink faster than ever before.

        • It's nice to have a roof over your head and not have to worry about coming up with rent every 2 weeks

          • +1

            @brad1-8tsi: Yes, it's nice to own a home. However, I'm happy to rent where I want to live and move when I get bored walking down the same street.

  • +17

    I have been in favour of scrapping negative gearing for existing properties for decades (despite benefitting from the scheme myself). I was hoping Labour would revive it for the next go around but they’ve gone to water. We’re condemning future generations to the rental market and this is not fair dinkum. In our 200+ year history, each generation was able to strive for a better life than the one before it. Unfortunately this is no longer the case and I worry about social cohesion. We have no right to deprive our children and their children the right to a home. Speak to your local member OP. Just as I have done.

    • Always ethically sound to prevent people gaining an advantage from a scheme that you have previously gained an advantage from. 🤔🤔🤔

      • +4

        Not that I had much say in it. And this was eons ago before property prices went through the roof and before super low interest rates. These are new developments that should be spelling the end of negative gearing but aren’t. Unless you’re suggesting we continue to burrow our heads in the sand and do nothing?

      • This statement seems fallacious, just because someone has done something wrong in the past that does not mean they cannot later say that same thing is wrong and should be removed. Reflecting on something you benefitted from previously and coming to the conclusion it is wrong is not ethically ambiguous in any way. People are allowed to make mistakes or change their opinion on a topic, that is the basis for growth.

        I would argue that the ethically questionable thing is trying to discredit someone because their past actions don't reflect their new opinion.

        • The statement I am referencing would have a lot more "ethical substance" if the benefit of the act was no longer enjoyed. I wonder if the relevant person would be willing to relinquish themselves of all benefits received from the act both directly and indirectly/consequently.

          Otherwise it just becomes, "Yeah, I made $x million playing the negative gearing property game … paid for all this stuff you see around me and a lifetime of great experiences … but, nah, I don't do that any more because its ethically questionable and I actively campaign for others not to be able to enjoy what I've enjoyed".

          • @Seraphin7: Yeah I understand where you are coming from but personally as someone who has never benefitted from this, I don't care at all if someone else previously benefited and have since changed their stance, what matters to me is they have changed their stance and will help in solving an issue they benefitted from.

            Actually I would go as far as to say I'm happy for people to currently benefit if they will actually help solve the issue they are benefitting from. If someone has the capacity to say "this thing im benefitting from negatively impacts a lot of people I should assist in solving it."

            Also I don't think completely removing negative gearing is necessary, I have voiced my opinion before but I think if you made the interest on the loan a capitalised expense instead of being immediately expansible it will do enough to address the issue without making it difficult for landlords who could actually need the benefit of negative gearing.

            The best example being bad tenants ruin the place and it needs to be repaired. This could be a massive issue for some people and having the chance to offset it against their income could make a world of difference for them.

            • @Bjingo: That's fair enough.

              On the other hand, I plan on making extensive use of negative gearing (on both residential property and other asset classes) now that I have passed certain other financial milestones.

              My view is that if the government wants to tax me on my gain, they can allow me a deduction for the expenses I've incurred in making that gain (whether those expenses add up to "negative gearing" or otherwise).

              And the fact that in a competitive economy, I simply believe that the benefits that others have received in the past should be equally available to those in the future.

              If someone has the capacity to say "this thing im benefitting from negatively impacts a lot of people I should assist in solving it."

              On that point, I believe that's an opinion that should be reserved to the person who has generated and risked their capital to generate the benefit. If they wish to use that benefit for the benefit of someone other than themselves or their family, that's up to them … not others who have not generated the capital and risked it create the benefit (in other words, typically those who are looking to benefit from someone else's hard work).

    • Respect, mate.
      Same thoughts here

  • +3

    YES
    When your economy is in the doldrums and everything is traced back to the price of property something has to give.

    • +2

      We… eat the rich?
      Fine, we eat the rich!

    • Speak / write to your MP - there will be no change if we don't change our attitude and let politicians know about it.

      Rule #1 for any politician - get elected
      Rule #2 for any politician - get re-elected
      Rule #3 for any politician - everything else can be ignored, check rule #1

  • +2

    OK scrap negative gearing, but by the same measure scrap any taxable gains on investment properties too.

    Or do you want your socialist cake so you can eat it as well?

    Or scrap corporate/overseas/government buying of residential property?

    Or let the whole ponzi scheme collapse and return houses to the status of places to live in and not investment vehicles.

    • +5

      Removing negative gearing doesn’t mean you can’t offset the expenses of the property on its income, just that you can’t offset it against your own taxable income

      • The income of your investments IS part of your personal income in most cases. People do set up companies and trusts etc but not most.

    • +1

      Sorry did not understand much of your post apart from the last line and that is correct - the house is a shelter and basic human right.
      By "financialising" the object of a basic human we got into a very slippery slope as a society and hence the emotional response from all sides when it come to this topic.

      All I am asking is the simple question of whether the society should pay for investors who can't even invest properly and get losses every year multiple years with growing portfolio of negatively gearing properties? Should we not spend money elsewhere?

      • -2

        It's not 'society' that is 'paying' investors it is government. And the point is this, if government is happy to tax gains then they are hardly in a position to disallow expenses. Or to put it in a similar context, would you be happy for government to pinch income tax but not allow you to claim any work related expenses? Same thing.

        As for spending money elsewhere, 'we' do not get a say in anything government does with our money. Would you like a few more nuclear subs and F35's that don't fly, or more hospital staff, better roads and less taxation?

        • +2

          if government is happy to tax gains then they are hardly in a position to disallow expenses

          Negative gearing doesn't mean you can't claim costs from owning the investment property. It means you can't claim the costs against your normal job income.

          Eg if your income is $80,000 and your property makes $15,000 and costs you $11,000. You would get taxed on $84,000

          If your income is $80,000 and your property makes $10,000 and costs you $11,000 you would get taxed on $80,000 NOT $79,000 as it is currently.

          would you be happy for government to pinch income tax but not allow you to claim any work related expenses?

          Of course you can claim work-related expenses. But negative gearing is like being allowed to claim expenses that have nothing to do with work. With property investment you should only be allowed to claim expenses that were incurred while making money with that property.

          • @Quantumcat: But as an individual you are taxed on ALL your income. It isn't divided up pre se.

            So as per your example if you made 95K that year form all sources and your expenses were 11K you would get taxed on 84K.

            Not sure how you figured your second example? Was there a typo in there somewhere?

            "But negative gearing is like being allowed to claim expenses that have nothing to do with work. With property investment you should only be allowed to claim expenses that were incurred while making money with that property."

            Yes, that is how it works. Negative gearing IS and property expense, i.e usually the cost of interest is great than the income. I'm not sure we are in disagreement here?

            • @EightImmortals: In Australia investments are treated differently to income. That's why you see things like capital gains tax.

              • @Quantumcat: Yes. Capital gains only applies when you sell the asset. The proceeds of which are added to your yearly income.

        • You are shuffling bags of mixed things - good skills for a politician, you can try yourself on that battlefield :)

          1. Income from properties is the capital income, income from work is the labor income - you can have multiple properties but only one 8hours a day slot to work and have some kind of a life-style. Australia ALREADY taxing labor at the maximum rate but is very LOYAL to the capital income allowing LABOR to pay for CAPITAL
          2. All good taxpayers as a society are PAYING for "investors" tax-avoidance schemes with negative gearing being being the most glorified one
          3. In order to sustain the government spending part of GDP taxes MUST be collected and by avoiding the fair share payment, CAPITAL is screwing LABOR twice: 1) through not paying their fair share; 2) when our brilliant-minded government decided that wealth-effect needs to be propped up by heavily subsidizing home-ownership from taxes collected from working individuals

          So, if you are good citizen who is working and paying taxes (with around $300 tax-deductible work related expenses if you don't have investments) - you are royally screwed. Talk to your MP.

          For a full disclosure - I am heavily invested in share-market so I theoretically will get hurt as well by NG scrapping.

          • @ALesha77: I agree with you about political ineptitude and don't want to take away anything from you said, so taking your quote in context, my reply (in terms of personal finances) is "Every person for themselves!"

            However my solution, broadly speaking, is 'less government wastage' as opposed to 'more taxation'. Giving the politicians more of our money is like giving more booze to an alcoholic and expecting that to fix the alcoholism. :)

  • -3

    Should start with fully franked dividends. Only country in the OECD that offers such a generous subsidy of investors. Put a sunset clause on this, giving investors say 5 years to divest, and park the funds in super funds instead. Why people who don't pay a cent in income tax should get huge payouts from the ATO is beyond me. Howard introduced this to shore up the votes of self funded retirees.
    After, we can look at CGT with regard to IPs. Use similar strategies, sunset clauses with time to divest property #5+, then work backwards, eventually leaving IP #1 alone. Have to be Australian resident/citizen to claim negative gearing.
    My 2c worth.

    • +5

      Because a lot of them are retirees who don;t earn enough from their meagre dividends to break the 18K pa threshold…for just one reason.

    • +9

      Should start with fully franked dividends

      You know tax is still PAID on these….. While neg gearing, means the tax isn't paid as such hence the 'tax savings'.

      • +5

        Another reason to progressively reduce company tax to zero and increase the GST by a corresponding amount to keep overall receipts square

        Companies pay 0% tax

        Poor people pay GST of like 30%

        Genius. They should get you to run El Salvador.

    • +3

      Should start with fully franked dividends

      From the misinformed.

      Company makes money to be able to pay full franked dividends. It is an imputation credit to the shareholder. The shareholder gets a refund because they don't have to pay that much tax. It is like tax withheld on employment income (PAYG), you get a refund at the end of the year because tax withheld is more than you owe.

      Negative gearing is an opt in. You enter into it for the benefit of lowering your tax rate, the refund is not on tax paid / withheld, it is on interest paid to banks that then pay profits tax and distribute the credit to their shareholders.

      If I was the government I'd rather abolish negative gearing because you can lower 37% tax rate on income rather than 30% credit given on company tax. Notice the 7% difference?

      • The shareholder gets a refund because they don't have to pay that much tax.

        The company has earned the income. The company has paid tax on the income. The shareholder has received fully franked dividends, and suddenly are eligible for a tax refund when the individual has paid little or no tax. If the individual paid any tax at all, the return on fully franked dividends in many cases exceeds the tax paid by the individual massively. Knowing individuals in this position, I'm calling it for what it it is, a rort.
        Can you explain why Australia is so unique that we alone out of all the OECD countries have such a tax situation? I can, Howard's government wanted to shore up the votes of a certain demographic. It's a rort, plain and simple. Yes it's legal, yes it's Australian tax law, but it's still a rort used by wealthy to invest, and receive a very nice unearned tax return.

        • +1

          The shareholder has received fully franked dividends, and suddenly are eligible for a tax refund when the individual has paid little or no tax. If the individual paid any tax at all, the return on fully franked dividends in many cases exceeds the tax paid by the individual massively. Knowing individuals in this position, I'm calling it for what it it is, a rort.

          So company pays 30% tax then at the hands of the shareholder they get tax again at marginal tax rate say 30%. So $1 becomes $0.70 then another $0.21 tax. Effectively 51% tax rate.

          If the individual paid any tax at all, the return on fully franked dividends in many cases exceeds the tax paid by the individual massively. Knowing individuals in this position, I'm calling it for what it it is, a rort.

          Fat chance. $100k income average tax is around 30%. At $100k you'd have no refund. To get any significant refund you'd probably only be get $50k in dividends. Don't forget a lot of people accumulated their shares using after tax income (without negative gearing).

          You're just uninformed.

          If you think 51% tax on dividends then maybe they should implement the same for your primary place of residence, after all you paid it with your after tax income and got a windfall.

          Can you explain why Australia is so unique that we alone out of all the OECD countries have such a tax situation?

          Contributions to super in the UK is pre tax 0% (15% tax in Australia) and 0% tax on returns. So should they be singled out too? They also have annual investment accounts where you can put 20k of after tax income and returns are tax free in perpetuity long as you keep it in the wrapper.

    • I can see many schemes that have one tag of "tax avoidance". For some reasons property investing for the purpose of negative gearing does not get that much of "air-time" and on contrary, enjoys the full support from ATO and government. I wonder why?

      • Because the ATO knows you are suckers. Think about how much money is involved. Selling agents make a commission (taxed), stamp duty for the states, land tax for the states, with low interest you need to really do some acrobatics to negatively gear. $1m property at 2.5% interest is $25k. Gross yield is around 3%. For such a big outlay and cashflow you get a tiny deduction.

        At the moment it really isn't interest that is killing you. Problem is trying to pay off the principal (which there is no tax advantages).

        • Thanks for an honest response.
          So, we have 2 million of landlords and around 13-14 million of those "suckers" in Australia. I hope these "suckers" will have enough motivation to change the ruling government and make sure that "non-suckers" pay their fair share.

          BTW, all those "taxable" goodies that you have mentioned are well-preserved by the industry through their own means and negative-gearing included. Those who close to this scheme know it inside -out to make a good use of it.

          • @ALesha77:

            So, we have 2 million of landlords and around 13-14 million of those "suckers" in Australia

            Pretty much. The only person you are richer than is the person who have no property or less than you. If you buy a house on a block there is every reason to think your neighbour's property is of similar value, along with the other 10k houses in your suburb, then maybe the other 30k people in bordering suburbs. Once you sell after agent fees you'd be struggling to buy back in (unless you are down sizing or borrow more) given the big amounts of stamp duty on the now higher prices.

            I hope these "suckers" will have enough motivation to change the ruling government and make sure that "non-suckers" pay their fair share

            No chance. Everyone is rent seeking. Basically trying to influence government policy for easy profits. Sitting on property and waiting for it to go up is the easiest path to wealth for so long. Just like why franking credits sank Bill Shorten. They pointed out a few people benefited a lot from refund on franking credits. Even if you got dividends of $70k the $30k (assuming 30% company tax rate) would just pay your income tax. So where is all the big refunds? SMSF and super funds that pay 15% tax but getting dividends on big portfolios.

    • Only country in the OECD that offers such a generous subsidy of investors

      Chile
      Korea
      Canada
      Mexico
      New Zealand
      All have dividend imputation systems. They are all OECD members.

      You appear to have as much knowledge of franking credits / dividend imputation as the labour party did when they were trying to explain their policy on franking credits and negative gearing, which for some reason they thought were inter-related. They didn't have a clue how it worked and the taxation implications at the various marginal rates. It was similar to John Hewson trying to explain the GST implications on bread as opposed to cake.

      If we didn't have the franking credit system it would encourage businesses to retain profits and use that equity to "grow the business". This is usually through M&A activities and Australian corporations have a truly woeful track record on M&A. They don't know how to walk away from a bad deal and usually pay too much. Telstra is a prime example of this. They love paying $50m for a startup and selling it 3 years later for $5m.

  • I'll see your abolition of negative gearing … and raise you an abolition on capital gains tax.

    People bang on about negative gearing like it's some great mystical beast brought to descend evil on the planet … I'm sure most of them don't even know what negative gearing actually is. And then equally forget the stoinking great CGT bill that can often come at the end of a period of owning a negatively geared asset.

    • You are mixing two things - one is the fair dole from the income and there are too many ways to optimize your tax avoidance through multiple properties.
      And another is the capital gain which is realized once when you sell your asset.
      If you are hoarding human shelter to build a business that cannot even produce proper income - that is your problem, not the society's so why should we not collect taxes on your other income?

      • -1

        "You" are already collecting taxes on all income earned, less expenses incurred in earning that income.

        Don't understand why anyone wants to "allow" expenses incurred in earning some types of income, but not others … other than due to the politics of envy and/or to drive out some socialist agenda.

        As I say to my kids all the time … don't get angry, get better.

  • +1

    I don't see how you get rid of any of these policies for existing owners. It's hard enough pushing the bill just for new investors to not have access, but if you include current and existing I just don't think it realistically gets ahead in any way.

    • +1

      Plus it could wreak havoc if people have calculated their income and expenses to be able to afford to do something, then you suddenly make it more expensive. Mass exit of investors would cause a rental price spike which could be disastrous for any renter who can't immediately turn around and buy a now cheaper house. If it is only on new investors, then at least they will know what they are getting into and will only invest if they can afford it.

    • It is possible if we are active as taxpayer and voters. Let your PM know your views if you care about your taxpayer's dole.

  • +1

    If you are still negative gearing at 2.5% interest rates then they probably need to look at your finances.

    $1m property with a 100% loan and 2.5% interest rate would be $25k a year in interest. Gross yield of 3% - 4% that kind of property would be expected so you'd hardly be negative gearing.

    • You will be surprised - https://www.firstlinks.com.au/100-aussies-five-charts-earns-...

      Almost 1.5 Million (one and half million!) have manged to lose money - 2/3 of all "investors"
      Those buggers MUST be doing something terribly wrong! And still don't have a clue that their business sucks by banging their head against the same wall with almost 400 thousand people having more than 1 property and losing money on this.

  • +1

    Good idea.

    But, way too many people are in it and will want to maintain status quo.

    Govt have to go nuclear for such a change to occur…

    • Speak / write to your MP - there will be no change if we don't change our attitude and let politicians know about it.

      Rule #1 for any politician - get elected
      Rule #2 for any politician - get re-elected
      Rule #3 for any politician - everything else can be ignored, check rule #1

  • just like climate action will ignite political bickering. it is a touchy subject and inaction is the safest thing to do right now

    • Unless you want to do something about it - like speaking to your local MP and voting for those who have political guts to make a change.

  • +4

    This thread is the prime example of people who are educated by a media that has a bunch of socialist degree idiots reporting on complex economic issues with zero idea on the effects to the wider economy

    Negative gearing isn't the issue

    Nether is Franking credits

    A lack of innovation, selling out our country to china, a lack of national pride due to bowing to every minority and over the top socialism is killing us

    bring on the downvotes

    • +8

      Yeah because taxpayer funded circlejerks of "investors" outbidding each other on existing housing stock have done such a terrific job of increasing housing affordability and rents.

      • +1

        lol prime example of a person who has no idea

        • +4

          Over the past decade, more than 93% of the total amount lent to investors for the purchase of housing has been for the purchase of established housing. Conversely, investors have accounted for just one-fifth of the total amount borrowed for the purchase or construction of new housing over the past decade.

          Overwhelmingly, the effect of negative gearing has been to inflate the price of existing housing – to the detriment of would-be home-buyers; to encourage Australians to take on more debt than they would have done otherwise; and to undermine, at a substantial cost in terms of revenue foregone, the efficiency and equity of the Australian tax system.

          • +1

            @horice: Ok 1st off stop saying Australians majority of the country hasnt had a housing boom take out Melbourne and Sydney and Housing price growth has been pretty standard

            2nd of all that is incorrect ALL the research says if you get rid of negative gearing rent will go though the roof - it may cool house prices but the fact is it will hurt renters who are often the poorest people

            3rd negative gearing means the investor is losing money…..yes LOSING NOT MAKING

            i could go on but i know your and the majority of people reading this are too dumb to understand how the wider economy works but lets say we get rid of negative gearing tomorrow what do you think will happen to house prices?

            Now after answering that question

            go read how the 2006 GFC happened and learn that houses going down can destroy economy

            I do agree reform on housing needs to happen but the effect of decreasing house prices is a hell of a lot worse then increasing house prices

            The best thing you could do to reduce investors pushing up housing is make other investments MORE attractive ie less tax on stocks, crypto, reduce taxes for business, reduced tax on savings interest etc

            • -1

              @Trying2SaveABuck: You speak purely from Greed

              Housing has increased nationally
              You and your kind are doing the hurting with your Boots upon the poor renters Necks

            • -1

              @Trying2SaveABuck:

              1. I think you need to check your stats - Sydney and Melbourne actually LAGGING in terms of house prices rise for the last 2 years
              2. What research? Quoting "Oxford scientist made a discovery…."? Maybe a link? Please?
              3. Let's be fair - investors "losing" money on this gig to avoid paying taxes on their OTHER income. And I can list a number of ways you can "lose" money and benefit from it like engaging contractors to do work on a number of properties including rented but not limited to rented and then claiming it as a loss. Be inventive.
    • +2

      Surely, these are the words of a wise man who respects people he talks to…

      Innovation, national pride - you won't get any of that by giving the bad incentives for people to bury the capital in the mud and by selling overpriced property to each other. You want to have innovation and pride - provide proper incentives other than greed and tax avoidance.

      China is an interesting topic but I (sadly) would not bet against the dictatorship who plan decades ahead through relying on democratic politicians who do NOT have political courage to plan beyond the next election cycle and act to the best of country even if that means short term pain for their electorate. I hate to say this but with this government we don't stand a chance.

    • socialist degree idiots

      What's a socialist degree?

      • +1

        Someone who didn't drop out at year 10.

        • Lmao some who got a 59 ATAR and thinks that the Arts degree they got makes them an econmics expert

          So they try to tell economists and financial experts how the economy should be run

          They push sensationalism in headlines becuz dumb people believe them like you see on this poll

          I'll add this I dont care if they get rid of negative gearing I do not negatively gear but the idiots voting against it are the ones who will suffer most, if and when it is gone when rent goes though the roof and unemployment raises becuz the building industry goes down the toilet. In which case all your 'year 10 'drop outs don't have a job.

          It is the same argument going green sure it sounds nice on paper but take away mining and property what does Australia have left? A bit of farming?

          I dont think people realise how much our economy will suffer if house prices decline for a prolonged period of time.

          • +1

            @Trying2SaveABuck: Why don't you tell us how much the economy will suffer if the housing goes into the bear market?

            People will lose interest in investing into mud and will actually get to innovative thinking and start investing into areas of economy that will really get Australia through the next 25 years without digging out resources and selling it to China. Maybe?

          • @Trying2SaveABuck: I take it you're an econ expert then?

            • @Autonomic: As someone who studied economics a tertiary level i wouldnt consider myself an expert but i have have a wide enough knowledge base to form a non 'sensationalist' and non bias opinion.

        • Wow, so much empathy. Did you drop out at year 7?

  • +1

    Negative gearing is to lose $1 just to claim back 45c.

    The tax brackets have moved making NG even less worth it.

    Note….negative gearing is not taxpayers funding investors, that has to be one of the worst fallacies I have ever seen believed by so many, probably leftists.

    • Most people have a problem with forecasting into the future because it involved numerous pieces of maths.

      They look at negative gearing benefits in the early years but not when it becomes positively geared.

    • I do no think it is exactly as you described it, you are probably confusing it with a tax refund scenario.
      With multiple properties there are way too many schemes how you off-set 1:1 your taxable income form other source.

  • Death tax.

  • I reckon many people don't even know the mechanics of negative gearing or franking credits, let alone how they fit into the economic system. People just jump on the bandwagon that both things are bad as perpetuated by the socialist left.

    • People choose their one topic. Those who want to own houses but get priced out want to take out negative gearing.

      Those who are in property but find they can't afford to invest in shares want to take out dividend imputation because they don't benefit from it.

      Nobody wants to pitch the holistic solution. Nobody is saying lets fix the system and put in a proper progressive tax system so people know exactly what they are paying so it isn't tax bands but a proper gradient system of reaching 30% tax at $100k. Or a consumption based tax that would hit the biggest consumers.

    • As I suggested to another kind poster in this thread:
      Well, dear sir, why don't you enlighten us with your wisdom?

      It's been a long time since I heard sweet fairy-tales about this being anything other than glorified government-backed and real-taxpayers-subsidized tax avoidance ponzi scheme used to hoard human shelter. I will be delighted to listed to a new one :)

  • +1

    Scomo: nothing to see here, move along. No need for new policy, best to do nothing at all and run a scare campaign on others trying to bring about change.

    • +1

      I don't think he would be reading this, mate.
      He has got much more important things to attend to, like meeting with his sponsors… pardon me, his cash-loaded lobbying electorate - developers, builders, miners.

  • +2

    No, because you probably don't understand what negative gearing actually is.

    • Well, dear sir, why don't you enlighten us with your wisdom?

      It's been a long time since I heard sweet fairy-tales about this being anything other than glorified government-backed and real-taxpayers-subsidized tax avoidance ponzi scheme used to hoard human shelter. I will be delighted to listed to a new one :)

      • +1

        It's a way of offsetting your expenses against your income. It's not special to property either, you can do it with any income source — business, shares, etc.

        People think it's some magical money for nothing, it's not.

        • Mmmm, good and safe choice of words, I like it.

          Then what do you say about a business that do not provide income after expenses? You will call it a mistake probably.
          What if someone made this mistake twice - with two properties? Some would call it an idiotic move.
          Now imagine 20 thousand people making same mistake more than 6 times - what that would be? Einstein would call it insanity, some people would call it a fraud.

          And now imagine that the government tells you that you can take you OTHER income and off-set it against this heavily losing business.
          That's a bloody gold mine! Make it lose more, hoard more properties and get all sorts of tax avoidance schemes (plenty are known).

          Sounds like a magical money tree to me.

          • @ALesha77: It's still no different to businesses or shares.

            You can borrow to invest in anything and offset it against your income.

            Property is not special.

            • @Leiothrix: I am NOT saying it is. By all means, every income has be taxed fairly.
              For a number of reasons, real estate is the first choice for all those who build the fence around their OTHER income.
              But, as I said many times - It is a tax avoidance scheme and nothing else.

          • @ALesha77: I'm pretty sure way more than half of ASX listed public companies do not make a profit and unlikely to make a profit ever.

  • I don't really understand it all, the housing market is interesting here though. In the US you can purchase a house and have the renter pay off your mortgage without having to chip in (postive gearing?)

    Here I see rents are so low that for a new loan, the owner would have to cover a large portion.

    Prices are definitely out of whack. The great Australian dream is home ownership, but we are fast becoming a nation of the haves and have nots.

    • +1

      I think the problem in the US is they have some kind of property tax, so expenses are higher and while it is good if you have a renter, it's a risk if you don't. So you see lots of properties just abandoned because it is cheaper for the owner to just stop paying the tax and the mortgage and let it rot than to maintain it.

      • +2

        Most major cities have a shortage and rents are also through the roof. Taxes are all over the place depending on county, from a few hundred to many thousands per year, it varies massively.

  • yes please

  • +1

    Houses are for shelter, not for speculation.

    Any time would be a good time to end all of the concessions given to this asset class. It makes no sense why there is such an incentive for people to speculate on housing, thereby pushing the prices up. I don't buy the argument that this is required to ensure investment in this space, other measures can be implemented, eg incentives for developers or tax incentives for building residential homes.

    Realistically, it is very unlikely for anything to change, because the people on the gravy train doesn't want it to stop, the people who aren't on the gravy train doesn't want it to stop because they think they can get on it at some point. The sad reality is that the gravy train will continue to move away from most people faster and faster and they will never be able to get on.

    The Sydney median house price of more than $1.3 mil is now more than 14x the median salary of $90k. There is a very slim chance that someone on $90k can ever buy a property at the median house price, not without pooling intergenerational wealth. When people start pooling intergenerational wealth, that's when you have a problem, because all these price appreciation in property is just driven by debt, its a house of cards.

    The ALP had very clear reasonable policies to tackle this problem in 2019, the electorate said no. It is very unlikely the ALP will introduce similiar policies even if they win the election next year. They probably wouldn't touch it until maybe their 3 term because of how politically toxic trying to make changes to these incentives are.

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