What Would Really Happen if Negative Gearing Was Changed?

jordanlane on 31/08/2025 - 12:54

What would really happen if negative gearing was changed?

There’s been so much talk about negative gearing and whether it should stay or go, but the real question is how any change would actually happen. From what I can tell, there are three main possibilities:

  1. Straight-up abolition: All negative gearing benefits are cut off immediately, for both new and existing investors.
  2. Grandfathering: Anyone who already has a negatively geared property keeps the benefits, but new purchases don’t qualify.
  3. Phase-out / transition (say 3 years): Deductions still apply for a while, but are reduced year by year until they disappear.

What do you think — would a government really risk abolishing it overnight, or is it more likely they’d grandfather existing investors and go slow on new ones?

Financial

Comments

          • tenpercent on 07/09/2025 - 10:36

            @IamHere2: So? All that means is those houses will be locked away as investment properties for even longer.

            • IamHere2 on 07/09/2025 - 13:27

              @tenpercent: Rest of the world except Canada doesn't have Negative gearing. And, they don't have housing crisis like we have. So, if rest of the world can survive without negative gearing. I guess we can also survive without it.

              Business can have Negative gearing with in it but not the 50% CGT discount. So, at least they pay the fair share of tax.

              Individual/ trust can have both ( negative gearing and CGT discount) and, that's the problem.

              If prices of house won't go up like 5 -10%. Business won't hold it forever. They sell it and move on to the next asset.

              • tenpercent on 07/09/2025 - 15:36
                -1

                @IamHere2:

                So, if rest of the world can survive without negative gearing. I guess we can also survive without it.

                Absolutely. I'm not advocating to keep it. It's an unfair system. But I don't think removing it will move the dial on house prices at all.

                If prices of house won't go up like 5 -10%. Business won't hold it forever. They sell it and move on to the next asset.

                How much of annual property price increases do you think is due to negative gearing?

                How much do you think is due to inflation of the money supply?

                And how much do you think is due to the demand for living in houses (including both to rent and to buy) in Australia far exceeding the supply of all dwelings?

                • IamHere2 on 07/09/2025 - 18:45

                  @tenpercent: If you agree that it’s an unfair system, then we should remove it. At the very least, the government would gain more revenue through taxes.

                  While inflation from money printing and immigration has certainly placed more pressure on house prices compared to negative gearing, it remains an unfair system and should still be abolished.

      • SlickMick on 01/09/2025 - 21:32
        -1

        Good to see that someone finally recognises that everyone's focusing on the speck and ignoring the plank.

    • JimB on 02/09/2025 - 12:05
      +1

      I don't negative gear as I don't think it's a good investment strategy for me but I also don't get 'limit to x houses'

      4 cheaper properties can have the same or less overall lost compared to 2 or even 1 more expensive negatively geared properties.

  • 7ekn00 on 31/08/2025 - 15:15
    +5

    The poor politicians would starve without negative gearing :/

    Won't somebody please please think of the politicians :P

  • Ozbar Gain on 31/08/2025 - 15:54
    +1

    What would really happen if negative gearing was changed?

    Everyone's investment properties would be cash flow positive

    • larndis on 01/09/2025 - 08:40

      I think you have misunderstood something

    • MrFrugalSpend on 01/09/2025 - 22:21

      i.e. rents would go up

  • JIMB0 on 31/08/2025 - 17:05
    +7

    The government would have to take it to an election. Going by what happened in 2019 they'd lose, which is why it will not happen for the foreseeable future.

    • mskeggs on 31/08/2025 - 22:28
      +1

      I disagree, but time will tell.
      The voters who aren't negative geared property investors (the vast majority) might be open to a change that happens gradually.

      • Beef jerky time on 01/09/2025 - 08:49
        +5

        The voters who aren't negative geared property investors (the vast majority) might be open to a change that happens gradually.

        Probably not. There's a lot of people who forward-think themselves into imaginary situations where they have money and investment properties. So they don't want negative gearing abolished because they won't benefit from it on the fantasy house that they don't own and probably never will.

        Sadly it's political suicide for any government that tries to fix the housing market because of these stupid attitudes.

        • JIMB0 on 01/09/2025 - 08:53
          +3

          Existing home owners also don't want to see the value of their house decline and end up owing more than it's worth.

          • Beef jerky time on 01/09/2025 - 09:03
            -2

            @JIMB0: Getting rid of negative gearing alone isn't enough to make housing prices decline by any meaningful amount - it would only serve to reduce the insane price rises. If negative gearing is the only thing keeping you afloat, then you probably couldn't afford that IP anyway.

            • JIMB0 on 01/09/2025 - 16:02
              +2

              @Beef jerky time: In the leadup to the 2019 election people panic sold and prices crashed in anticipation of negative gearing being removed. Once the election was over prices shot back up. Maybe it would have only been a temporary decline, who knows. I was hoping for further declines after the election but when when Labor lost I kicking myself for not buying before . Luckily covid came along to save the day.

        • Lunarboogie on 01/09/2025 - 19:22

          I'm not so sure. Strip away the emotional arguments and there isn't solid evidence to support NG (if it was an open and shut case, all countries would be doing it).

          Public sentiment has shifted significantly since 2019. I don't doenough of this but if I was forward thinking in imaginary situations, I wouldn't be betting that NG will be around for the longer term. My sense is NG is a policy who's time has gone.

      • [Deactivated] on 02/09/2025 - 10:32
        -1

        2/3’rds of voters own their own home.
        Tell me how many people want to lose out on their home and want their home to depreciate.
        1/3 do not and tend to b1tch about it incessantly instead of save their money and take responsibility for their spending.

    • ThithLord on 01/09/2025 - 08:34
      +2

      Yep. The amount of people demanding Labor commit electoral-suicide by platforming NG/CGT reform is high enough; the amount of people who would vote for Labor to enact that is far, far smaller.

    • isthatallyougot on 03/09/2025 - 10:02
      +1

      Why does the government have to take it to an election?

      Labour had a majority now, they could easily pass new laws to tweak these policies, but they lack the conviction to make any changes.

      • JIMB0 on 03/09/2025 - 10:11
        +1

        They don't have a majority in the senate for starters. Also it wasn't part of their election campaign, so the people didn't vote for it and would feel betrayed, then they'd get voted out next election (political suicide).

        • isthatallyougot on 03/09/2025 - 14:07
          +1

          The greens would support it and I reckon a lot of people would actually support it.

          I disagree with your comments about the government only actually implementing what they say in an election campaign. Being a strong leader is doing what is right for the country and not actually worrying about being elected a few years from now.

          If labour were to switch off negative gearing, I highly doubt the libs would run on a campaign to bring it back at the next election.

          • JIMB0 on 04/09/2025 - 06:24

            @isthatallyougot: Where were all these supporters back in 2019? The Coalition won an unwinnable election thanks to people abandoning the Labor party over this issue. I doubt much has changed in 6 years.

            This is major tax reform. If it has the desired effect, lots of people will end up with negative equity in their home. They'd be trapped, unable to refinance or move house. People would die. It would be a disaster. Is that what's right for the country?

  • Sweet3st on 31/08/2025 - 17:58
    +6

    I think limiting to 1-2 IPs as a first step. It won't make a huge difference but small steps in this direction are the only way to go given the hysterical shrieks from the right wing media that anything more substantial will provoke. We need to build more housing bottom line.

    • mskeggs on 31/08/2025 - 22:32
      +3

      The 300,000 voters with more than one property negatively geared, and we can assume some of them have cashflow positive for some of their holdings, might hate it, but a change to limit it to something like just one property might not show up in the electoral map.
      I'm keen to see anything being done for home affordability, even if it starts around the edges and only impacts small numbers so we stop the problem getting worse.

      • tenpercent on 01/09/2025 - 12:29
        -1

        It's not even about affordability any more. It's about availability. The underlying issue isn't renters and people living with their parents into their 30s being unable to afford a home (although that's real and a valid concern), it's that there's not enough homes to go around so homelessness is just ballooning. Every new immigrant family (regardless where they come from) is directly or indirectly displacing another family already here into homlessness or crowded accommodation (e.g. 1 family per bedroom in a 3 bedroom rental). That's the first thing to address to put a clamp on the severed artery of Australian housing.

        Then all the other things need immediate attention. More public housing (use the military to do construction while they're not deployed), limit foreign and corporate and trust ownersip of housing, shift tax incentives to new builds only that get promptly sold to Australian citizen owner-occupiers (excluding knock down rebuild arrangements unless it's a single family home being replaced by a duplex or units; not granny flats which locks up good land for decades with substandard cramped housing). Interest free funding for new local businesses to start manufacturing and producing building materials here at competitive prices. Encourage affordable prefab construction. Release new land to first home buyers, not to the big corporate land and building developers who then bank it and drip feed it into the market to squeeze every last cent they can out of it.

        There's a lot that can be done. But most politicians are lawyers by trade so they lack creative thinking beyond schemes to dodge taxes and skirt laws and often lack compassion or care for issues that do not directly affect them.

        • Typical16-bitEnjoyer on 01/09/2025 - 17:50
          -5

          Shock horror at this hot take. Let me guess, you marched with the neo nazis yesterday?

          • tenpercent on 01/09/2025 - 21:41
            +1

            @Typical16-bitEnjoyer: Shock horror at your hot take (fed to you by the nightly news). Government agents dressed up like antifa and were spouting bigoted racist drivel at a rally they hijacked for the cameras. Therefore anyone who realises that more people equals more housing demand must be racist neo nazis too?
            What if a nazi said the grass was green and the sky is blue?

            • Typical16-bitEnjoyer on 03/09/2025 - 08:34
              -1

              @tenpercent: Can you share photos and video of this "antifa"?

              Because there's plenty of photos and video of neo Nazis front and centre at the rallys, including leading speeches to the low IQ marchers.

              Is Thomas Sewell a government agent?

              How does one "hijack" a rally, when they organised it in the first place, and are invited to the podium directly and publicly and then handed a microphone?

              • tenpercent on 03/09/2025 - 19:56
                -1

                @Typical16-bitEnjoyer:

                Can you share photos and video of this "antifa"?

                Let's recall what I said…

                dressed up like antifa

                Just because they all sewed tiny embroidered badges on the side arms of their same same all-black antifa costumes, doesn't change anything.

                How does one "hijack" a rally

                In Sydney, they literally ran out in front of all the normal people marching and all 10 of them (out of thousands of protesters) pushed their way into prime position behind the main banner at the front. Just in time for the mainstream media photographers and video cameras.

                In Melbourne, there was no central organisation at all so they injected themselves into the middle of the assembled crowd and they marched off in one direction whilst the vast majority marched in a different direction.

                I suggest you check out recent content from the Australian-Jewish journalist Avi Yemini who was attacked by the neo-nazis at the Melbourne event and covered the whole thing from among the crowds of protesters. FYI, the Nazis were booed by the majority of protesters. And there were many protesters from a range of backgrounds.

                I would also recommend you check out content from Joel Jammaal who extensively covered the Sydney event, live, including having his own cameraman there throughout the event.

                Even Channel 10 ran a fairly balanced report.

        • [Deactivated] on 02/09/2025 - 10:41

          There’s 20 000 troops in Australia full time and of those, some are tradies for the military.
          But the majority have zero experience with residential construction..
          Recipe for disaster. There are better ways.

          (Increase trades, half apprenticeship times, split trades into “new construction” and “emergency fix” for some trades)
          Advertise to the hilt, remove tafe fees.
          Provide better wages

  • larndis on 01/09/2025 - 08:49
    -1

    Most likely to happen would be full grandfathering for all properties bought before date x (e.g. 1 July 2026), then either limiting to one property per tax payer or abolishing for all properties purchased after that date.

    Also, what do you mean when you say 'abolish negative gearing'? Do you mean all costs of owning the property are no longer tax deductible? Or that you can only deduct up to the amount of rent income declared, i.e. you can't go 'negative'?

  • Meho2026 on 01/09/2025 - 09:11
    +2

    If you consider how much rents have surged in the last 5 years, it is likely that only relatively new property investors are now negatively geared. Grandfathering or phasing out the negative tax deduction is unlikely to have any impact. Abolishing negative gearing for all isnt likely to get voter support and even if it happened, its not going to flood the market with properties and increase affordability. The solution is to build more homes but the government is really only actively supporting the build to rent sector with big tax incentives to the corporate owners.
    What this means is, the government is steering us away from individual property ownership, the next generations will be permanent renters.
    Buying a property to live in as your PPR is now so unaffordable to some people that their only way in to the property market is, not to purchase as an owner occupier but as an investor claiming negative gearing while they continue to rent where they live. Removing negative gearing will kill that option too.
    Discussion about negative gearing is a red herring. We should be fighting the government for the construction of more dwellings for individual ownership not the build to rent industry.

  • cnrmlj on 01/09/2025 - 10:47

    Negative gearing is basic tax logic. You declare income and any expenses incurred in earning that income such as interest on borrowings are offset against that income. There is nothing controversial about it or in need of change.

    On the other hand, the 50% discount on capital gains is insane. There is no tax logic for having it and it should be removed immediately. At worst go back to the indexing method we used to have but i would be comfortable if it was just wiped completely.

    Full disclosure, I own 2 investment properties so would be severely impacted by the change i have suggested but it is the right thing to do IMHO.

    • MrFrugalSpend on 01/09/2025 - 22:23
      -1

      "borrowings are offset against that income"

      Actually, the point of negative gearing is you can offset the losses against OTHER income… i.e. run it at a loss.
      If it were abolished, you'd have to treat it as an isolated asset class and couldn't offset the losses against your ordinary income. It would cap out at $0

      This would:
      A. Push up rental values as people would ask for more to at least break-even;
      B. Push real estate into corporate investors hands, where all their income is business income in property so they effectively can write off all expenses against investment tax without it being called negative gearing.

      The housing problem is supply vs demand - encouraging investors to pull money out of housing will not increase supply , and it will not reduce demand for dwellings for people to live in - It will only take less houses from the rental pool into home ownership and corporate investors. Still doesn't fix the problem which is lots of population growth rapidly, and constrained supply, planning restrictions, speed to market etc.

      A better option would be to incentivise people to build new for investment by only allowing tax breaks on newly built properties.

      • JimB on 02/09/2025 - 12:10

        "A better option would be to incentivise people to build new for investment by only allowing tax breaks on newly built properties."

        Agree with this.

    • JimB on 02/09/2025 - 12:10
      +1

      either 50% CGT discount or index is fair.

      Without it, you'll pay tax on a paper profit but in reality, you may pay tax on 'profit' where you lost the real value of money.

      • daleyboy79 on 03/09/2025 - 09:33
        -1

        How is anyone going to pay tax on a 'paper' profit? CGT is only incurred when an asset is sold. That will never change

        • JimB on 03/09/2025 - 10:43
          +2

          Lets ignore Division 296 tax for now.

          When I say pay tax on a paper profit, what I mean is that if you purchased a property for $1,000,000 and ten years later sell for $1,400,000, you haven't made any real world profits.

          On paper you will pay CGT on a 'profit' of $400,000. Without the 50% CGT discount, you'll have to pay tax on $400k.

          While $400k sounds like a good profit on paper, in reality, you haven't really earned anything in terms of time value of money. $1.4M is just $1M ten years ago.

          Hence why we have the 50% CGT discount, or indexation method for calculating the cost base/CGT,

    • daleyboy79 on 03/09/2025 - 09:32

      Agree 100%. Also only need to look at history. When did house prices start going crazy? Almost right after little Johnny implemented the 50% CGT rule!

  • 82norm on 01/09/2025 - 13:37
    +3

    The sentiment around negative gearing, housing availability, and affordability presents the current government with an opportunity to make significant policy changes. Such reforms would likely be viewed positively if the aim is to make home ownership more equitable and fair. Unfortunately, I can’t see this happening, as both sides of politics remain too heavily invested in the status quo.

  • Checkmate3023 on 01/09/2025 - 15:04
    +1

    In the short term you would see an exodus of landlords increasing supply but that would dry up and probably result in reduce supply and investors steer clear of property making new projects harder to get off the ground

    Anyone who knows anything about new estates know most projects cant start till 80% of the stock is solid in in phase.

    Ultimately im fairly sure both parties have modelled hanges to negative gearing any it Ultimately hurts renters and reduces property tax revenue thus equalling out to be a 'net negative'

    Disclaimer i got no dog in this fight i dont engage in negative gearing

    Overall im not against changes to it or even straight up removal of the policy it but the issue with housing is demand and high migration take out all the noise from the past 2 days we cant keep bring >750k people here whilst we build circa 150k new dwlelings annually

    • gromit on 01/09/2025 - 16:00

      my main beef with changing NG is it will do SFA for housing prices and have a huge negative impact on new supply. The net effect we will be even worse off and it will completely detract from making positive gains on the real problem of supply.

      • Checkmate3023 on 01/09/2025 - 16:41

        legit what i said in my comment but dont bother to read what a write…

        thus equalling out to be a 'net negative'

        the left medias war in investors is a distraction to the migration crisis we have in this country anyone who cant admit mass migration isnt the core issue at the moment is lost to the propaganda

        there are 'other factors' but migration is the key metric to excessive demand and excessive strain on infastructure and public services

        • gromit on 01/09/2025 - 18:02

          And where did I say you were wrong? obviously you never bothered to read.

          • Checkmate3023 on 01/09/2025 - 18:03
            +2

            @gromit: fair enough i apologies i thought you were having ago at me - i agree with your sentiments someone else seems to be 'disagreeing' with both of us'

            • gromit on 01/09/2025 - 18:06
              +1

              @Checkmate3023: exactly, I completely agree with your sentiment, my intent was to reinforce not detract. I find it frustrating that people are so focused on NG or foreign buyers that they are preventing the government from actually fixing the real issue of supply. Supply either requires less immigration or more construction or even a combination of both and you dont achieve that by chasing investors away.

              • Checkmate3023 on 01/09/2025 - 18:11
                +1

                @gromit: i agree

              • [Deactivated] on 01/09/2025 - 18:24

                @gromit: There's no single item, there's alot of pieces to the puzzle (i dont want to say "issue" because I dont see immigrants as a problem - I do think there should be less net overseas migration to Australia until either more houses are built or we have better capacity and higher demand for jobs but that's something else)

                So a combination of factors,
                Negative gearing is a very small factor (if even a factor at all)
                Australia's love of property as an investment vehicle
                People not wanting to live in other states/areas or regional areas (only ever wanting to live where mummy and daddy grew up).
                Lack of tradespeople and the inherent lack of value that the education system assigns them (from k-12 - this didnt happen overnight, you can thank teachers for this attitude)
                Lack of state governments support of tradespeople
                The "Putting up on a pedestal" of a degree (which for alot until its paid off is a liability)
                The price of a university education in Australia (which is paid for in the form of a loan for most under HECS)
                The lack of financial literacy of most Australians (which ties into the direct one above of HECS and a university education- GET A RETURN ON INVESTMENT - no point getting a degree to be the best Tuba player in the world).
                An understanding of what Australia is missing and career paths - which ties into basic economics and supply and demand.
                Higher productivity and less red tape
                A competent government that doesnt outsource their roles to an economic roundtable and then do nothing with it anyway.

                Until you have a grasp of financial literacy, you should not own a home. But if you want to own a home, I would encourage you to 1. Talk to a mortgage broker (they will tell you what you need, run through a budget with you and show you a breakdown of your expenses) - you also might be surprised as you might even be eligible to own a home already (note I am not a broker but when I did buy, I didnt realise until I talked to one what was possible - dont talk to a bank, a broker can get you the best deal and give you specific advice).

  • Danger on 01/09/2025 - 15:49
    -1

    I don't think it was even a part of round table discussion that politicians had. Really need NG gone.

  • DontNeedThis on 01/09/2025 - 15:52
    -6

    Abolish negative gearing and other tax incentives + quadruple stamp duty on investment properties (not owner-occupied) = Market crashes and property leeches go berserk trying to get rid of their "investments" and putting their money into industry, research, and development. Economy booms and as a bonus, 50% of Australians won't be homeless in 20 years.

    • gromit on 01/09/2025 - 16:03
      +1

      you forgot all the builders and tradies that go broke as no one can afford to build anymore and supply dries up completely as no new supply which in turn takes down many of industries dependent on this market. What you are suggesting would be a jobs and business bloodbath to go along with the investor bloodbath.

      • DontNeedThis on 01/09/2025 - 16:14
        -2

        I don’t really follow your logic here. Negative gearing and investor tax perks don’t actually reduce the cost of building. materials, labour, and land still cost the same. What they do is inflate demand from investors who are buying for speculation rather than to live in the homes.

        If those incentives were removed, builders wouldn’t just stop working. They’d still sell houses, but increasingly to owner-occupiers and families rather than landlords looking for a tax write-off. That doesn’t destroy supply, it just shifts who the supply is aimed at.

        I do agree there’d likely be a short-term adjustment. Some developers who rely heavily on investor pre-sales might struggle, and tradies could feel a slowdown while the industry rebalances. But that’s not the same as the whole sector collapsing long-term. With lower house prices, ordinary Australians would find building and buying more accessible, and construction would continue. just less distorted by speculative investment.

        What would actually happen is a shift in who drives demand. Right now, a big chunk of new builds are pre-sold to investors chasing tax write-offs, which pushes prices up and locks out owner-occupiers. If that speculative demand dropped, it doesn’t mean demand disappears altogether. families, first-home buyers, and upgraders would still want homes, and governments could step in with more social and affordable housing projects. Builders wouldn’t vanish, they’d just be selling to a different market.

        So yes, there could be a temporary shock, but in the long run the industry wouldn’t die. It would stabilise on healthier demand from people who actually need housing, rather than investors treating it like a tax-sheltered asset class.

        • gromit on 01/09/2025 - 16:20
          +1

          if you raise the cost for investors which is what you just advocated it means there will be significantly less investment and if the market is smashed then either builders and tradies need to accept huge pay cuts or go broke. Effectively you are cutting the throat of supply when what you need is to somehow encourage it. The cost of building is expensive to the point of being high risk, making it even worse return wise would devastate supply and the building industry.

          • DontNeedThis on 01/09/2025 - 16:29

            @gromit: I see what you’re saying, but I think there’s a misunderstanding about how supply actually works. making property investment less tax-favoured will reduce speculative demand, but that doesn’t “cut the throat” of supply. Builders and tradies don’t only rely on investors. there’s still strong demand from owner-occupiers, families, and first-home buyers, which is the foundation of sustainable housing supply.

            speculative pre-sales aren’t the only way to fund construction. Developers can pivot to selling to people who actually live in the homes, or work with governments on affordable housing programs. The short-term adjustment might slow some projects, but in the long run, reducing investor distortion stabilises the market rather than devastates it.

            Builders and tradies may see a temporary shift, but it’s not a bloodbath. it'll be a healthier, more sustainable market. Not this ponzi scheme.

            • gromit on 01/09/2025 - 16:34

              @DontNeedThis: new builds are generally really hard to justify cost wise, The actual cost to build is not goign to significantly reduce, if anything it will continue to creep up. So to sustain that the building industry needs prices to remain high and continue to increase otherwise no bank will lend to anyone for building unless you have massive deposit to offset the value to cost difference.

              For example I am in the middle of a build now, when finished my house will be worth about $200k LESS than what it cost to build but we went ahead anyway to get what we want and we could afford it, the bigger the difference between cost and value the less the banks will lend for building. The less banks will lend the less new supply.

              • DontNeedThis on 02/09/2025 - 08:36

                @gromit: I agreee, the build cost vs valuation gap is a genuine problem. But that issue exists regardless of negative gearing. Construction costs have been running ahead of wages and inflation for years, and keeping house prices artificially inflated through tax breaks isn’t a sustainable solution.

                If the only way to make new supply “stack up” is to rely on endless price growth and speculative demand, then the system is fundamentally broken, which is what I've been saying. That’s why reform has to go hand-in-hand with measures like tackling input costs (land release, planning efficiency, supply chains), shifting finance models (so builds aren’t dependent on investor pre-sales), and boosting government-backed affordable/social housing to anchor supply.

                Yuour experience highlights the financing challenge, but I don’t think the answer is to keep subsidising speculation. It just delays the adjustment while making housing even less affordable for ordinary buyers.

                • gromit on 02/09/2025 - 09:21

                  @DontNeedThis: of course it is a problem, I don't disagree, but the solution is not to tear it all down and make the industry collapse along with thousands of jobs and businesses. The government needs to work out how to address the supply problem FIRST rather than pulling the rug and seeing where all the cookies crumble.

  • gezza90 on 01/09/2025 - 16:06

    Abolishing negative gearing would likely discourage property investment, particularly among those who aren't already well-capitalised. Investors with smaller deposits say, less than 30% would be disproportionately affected, as they would no longer be able to offset their losses at EOFY. This could make property investment significantly less attractive for this group.

    For those with larger deposits (e.g. 50% or more), property may still be a viable investment, but even then, the value proposition becomes questionable. For example, someone with $700,000 in cash considering a $1.4 million property might achieve better long-term returns by investing in ETFs, shares, gold or SMSF.

    The removal of negative gearing could also place upward pressure on rents, as landlords may attempt to offset the lost tax benefits through higher rental prices.

    This is a policy the ALP has previously supported, and it’s likely to remain part of the national political agenda while they are in government. However, this issue doesn't exist in isolation. If the government is willing to remove tax deductions for property investors, it raises broader questions about other forms of tax concessions such as those for business assets. For instance, how would this affect tradies buying utes, or businesses investing in plant and equipment and claiming the loss through depreciation? These types of changes could set a precedent and potentially lead to a much wider rethink of the taxation system as a whole.

    • kaleidoscope on 01/09/2025 - 17:13

      These types of changes could set a precedent and potentially lead to a much wider rethink of the taxation system as a whole.

      Very unlikely to happen… Most of the people in power are short sighted and want big changes in shorter run and will leave a bigger mess to clean up after their term is up.

      • gezza90 on 01/09/2025 - 18:55

        That's politics 101 for you. I work in the rail industry, and I can say firsthand that during the Turnbull and ScoMo years, the Liberals sold off a significant amount of government land mainly for short-term revenue gains through TAHE, just to make the books look good.

        As you can imagine, that’s created a mess for us. In some areas of the rail network, we've now got no choice but to go underground because there's no longer enough land available to slew the tracks.

        But hey, I’m getting off track here (no pun intended). As the saying goes, “you can’t have your cake and eat it too”.

    • czau on 02/09/2025 - 12:05
      +1

      "Abolishing negative gearing would likely discourage property investment"

      You have very static view on the market.
      If you say that "the value proposition becomes questionable" the market will adjust until it will became good investment again.
      Specifically yield risk ratio.

      • gezza90 on 02/09/2025 - 12:41

        Well then it's probably worth adding "would likely discourage property investment in the immediate term until the market adjusts making it a more attractive and viable investment"

      • joelmuzz on 03/09/2025 - 10:30

        That adjustment would be a crash in property prices. People will say that is the goal, however the consequence will be a ton of loan defaults leading to an economic recession which brings bigger problems than we have now.
        Changes have to be gradual to control the crazy property inflation rate, without causing prices to fall.

  • lilyesp on 01/09/2025 - 17:37
    +5

    Ppl think those who own investment properties are billionaires …

    • [Deactivated] on 01/09/2025 - 18:11
      +1

      then when they buy their first place and have to pay a trade to fix something they realise that nothing in life is free.

  • Typical16-bitEnjoyer on 01/09/2025 - 17:45
    -2

    Abolish.

    Problem is it's political suicide for the major parties for rich benefactors and rich voters. As more oldies "no longer vote" and the next generation come of age, we will see this change eventually.

  • [Deactivated] on 01/09/2025 - 18:10
    -1

    ramifications:
    1. rent prices would increase
    2. places would become more dilapidated and owners less willing to fix issues.

    Note that Negative Gearing and Depreciation schedules for buildings are different things.

    Spending $1 to hopefully get 30 cents back is not the best investment I ever heard of… here's how it works:
    Tenant is renting and a shower head breaks, tenant reaches out to owner to fix, shower head might be $150-300 + cost of plumber and plumbers call out fee etc - owner fixes and claims the cost of plumber and depreciates the shower head over the life of the shower head. The cost of the plumber… you can claim that and get 30% back… and the shower head claim the depreciation over 5-10 years…

    1. Higher costs passed onto tenants in the form of rent increases.
      OR…
    2. Property markets crash
    3. Those that have purchased property in the last 5 years are now in negative equity - trades cannot be afforded because there is no incentive to fix items - if you own and rent, you increase rent to make up for the money lost.
      Those that cant carry the changes sell and carry the loss as a tax incentive for the next 10 years.
    4. this causes everyone to lose out - trades lose livelihoods, Australia enters a recession if not a depression.
    5. First home buyers cheer (but they could never afford a place anyway because they never saved)

    Negative gearing isnt the worst - the speculation on property is probably what you're annoyed by.

    Guess if you bought a property and held onto it for 5-10 years (suburb becomes gentrified) then sold it for a profit.. you'd be happy, but you're also paying CGT on that.
    But conversely, you'd be annoyed if you sold and didnt (remember you needed to pay stamp duty originally, a realestate agent etc).
    so its in your interest not to sell until you are likely to get a return on investment…

    but every investment carries risk (shares and even paying off your mortgage is probably a better investment).
    What is more likely to annoy most is if everyone else has had the benefits for the last 25-30 years and you lose out.

    The best thing people can do is actually learn how finance and different investments work and then take advantage as best you can.

    • duchy on 02/09/2025 - 17:10
      +1

      The shower head cost is deducted immediately in the current FY as it's a repair.

      • [Deactivated] on 02/09/2025 - 17:20

        its an asset - can claim the plumber's work, depreciation schedule for the shower head.

  • Mrgreenz on 01/09/2025 - 18:21

    Lots of wailing and teeth gnashing.

    A small (probably immesurable) rebalance of the property market occurs within the levels of background noise.

    We continue life with a fairer less complicated taxation system.

    Every minor fluctuation in house and rental prices is declared a direct result of the abolishmemt of NG for a few years.

  • Lunarboogie on 01/09/2025 - 19:36
    +3

    NG's impact on house prices and supply is debatable and won't be resolved here.

    The bigger question is why tax payers should continue subsidising landlords (most of whom are on higher incomes) to the tune of $12 billion annually. I'd rather use this windfall to fund a million other priorities than those fat cats. This rort has gone on for long enough.

    • Aneurism on 01/09/2025 - 20:57
      -3

      Why is the taxpayer throwing money at single parents who don't bother to raise their feral kids properly as well as throwing money at policing required for stupid constant rallies and schooling that panders to woke idealogy. The point of negative gearing if it is an investment property is that it is likely to be positive gearing and even if it isn't, given the tax can be deducted means it is at least coming from someone who is a productive member of society.

  • lonewolf on 01/09/2025 - 20:29
    +1

    Are we saying the reason why labor lost the elections was due to the public reasoning out the pros and cons of negative gearing. My understanding is the general public these days seem to vote based on which party has better scare campaign against the others policies and only a smaller % actually researches the policies , does some of their own critical thinking on it and decides who to vote based on that…

    • tenpercent on 01/09/2025 - 20:47

      This year 34% gave first preferences for Labor and 33% gave first preference to LNP. Barely a difference.
      Last time it was 33:32 LNP:Labor. And similar the time before that.
      So we have two thirds of the country who are rusted on to their preferred major party who don't determine the outcome. It's decided by the supplementary preferences from the one third (and steadily growing number) of voters who don't want either of the two major parties representing them.
      It's ultimately a matter of which one is 'least worse' and therefore "which order should I rank the two bastards after I give my top preferences to better candidates?".
      Most election cycles "least worse" seems to be predominantly be defined by answering the question "who is going to spend the most money on me?". Occassionally there's an element of "which one is not going to screw things up for me?" and that seems to have more sway over the order of that one third's supplementary preferences (e.g. the 'landslide' against Labor when they proposed axing negative gearing, e.g. the 'landslide' toward Labor this year when they ran a lot of negative campaigning against LNP).

  • Aneurism on 01/09/2025 - 20:49
    -4

    What people don't seem to realize is that negative gearing is something that is accessible to anyone who works consistently and budgets well with the aim of investment growth. Removing this just makes it harder for people to step from poverty to prosperity.

    If people complain because they don't earn enough to utilize it just have themselves to blame. In my opinion the same thing can be said for incentives such as baby bonuses (where people with no kids get screwed over), or sick leave (where single people who have no attachments have to cover for people who are constantly sick or have to look after their family).

    Just because specific individuals don't take advantage of something that is available to everyone, one needs to view things objectively to understand these things exist for a reason. Personally, I would argue that society would be better if they removed single parent welfare and discourage divorce at a whim.This would mean less demand for split family housing making more spaces available to others.

  • haemolysis on 01/09/2025 - 21:28

    Every time it is ever brought up politically, grandfathering is almost always mentioned. There’s no way in hell anyone would touch a hot political potato like ripping away someone’s tax break. They’ll only ever have the confidence to take it from those who are not already claiming said tax break.

    That said, there’s barely any point touching the law if grandfathered. The benefits won’t reflect for decades.

    Rip the band aid!

  • Dorge on 02/09/2025 - 00:10
    +2

    There is a really simple solution. Stop allowing investment property debuctions to be made against assessable income from other sources, such as your wages or business income.
    You cannot deduct other losses for example losses in the share market against wages and such so why property.
    Remove this loophole, you fix a ton of inequalities.

    • DontNeedThis on 02/09/2025 - 08:41
      -1

      Exactlythat’s the heart of it. Property speculation gets a special tax privilege that no other investment enjoys. If you lose money on shares, crypto, or a small business, you can’t write it off against your wages. so why should property leeches get that perk?

      Remove the loophole and you don’t “kill” investment, you just make it play by the same rules as every other asset class. Fairer system, healthier housing market.

      • JimB on 02/09/2025 - 12:16
        -1

        But it is the exactly the same as every other asset class. lol

        Income losses on owning shares using borrowed money (interest cost) is deductible against employment income, just like property loans.

        Capital losses on shares and houses when you sell the asset is not deductible against employment income.

        • DontNeedThis on 02/09/2025 - 13:14

          Fair point on interest deductions, you’re right that if you borrow to buy shares, the interest can also be written off. The key difference is in practice: most people aren’t deliberately running share portfolios at a loss year after year just to offset wages. Property investment, on the other hand, has been systemically structured around negative gearing, which massively distorts the housing market.

          So while the mechanics of deductibility might be similar, the scale and social consequences of applying it to housing are completely different. That’s why reforming property tax rules is critical.

          • duchy on 03/09/2025 - 09:00

            @DontNeedThis: No one is deliberately running property portfolios at a loss. To pay $1 and get back 45c (at most) is not such a great deal for obvious reasons.

            • DontNeedThis on 03/09/2025 - 18:15

              @duchy: That's such a nonsense that keeps getting repeated. It's not about making profit, it's about the government babysitting the rich so they don't have losses.

    • JimB on 02/09/2025 - 12:14
      +1

      "You cannot deduct other losses for example losses in the share market against wages and such so why property." WRONG

      Of course you can.

      Income losses on owning shares using borrowed money (interest cost) is deductible against employment income, just like property loans.

      Capital losses on shares and houses when you sell the asset is not deductible against employment income.

    • joelmuzz on 03/09/2025 - 10:38

      Its not simple since killing negative gearing (the personal income tax offset) will crash the property market overnight as tens of thousands of investors bail out and move their investment equity elsewhere.
      The consequences of everyone elses property devaluing to less than their mortgage are severe for the economy. A lot of small businesses will lose their financing security and therefore cease trading etc.

      Change has to be slow and controlled. Also focused on the actual overpriced suburbs, not the towns with no land shortage which benefit from development and outside investors.

  • ColtNoir on 02/09/2025 - 09:31

    I think part of the sell needs to be the distinction between NG and general expense claims vs income. I have no issues with business claiming an expense, but people shouldn’t be able to claim the loss against another revenue stream eg rental loss to general income tax

  • czau on 02/09/2025 - 11:53

    It would improve market clarity.
    At this moment negative gearing rewarding high income earners via tax deductions to commit their capital into unprofitable investments.
    This is sucking capital out of our capital/stock markets and lowering economic activity and therefore our GDP and tax revenue.

    • duchy on 03/09/2025 - 09:03

      But someone needs to still provide housing. If the government doesn't want to become landlord they will need to provide tax incentives to institusions / business / super funds. I don't want my Super Fund to become a landlord - it's not such a great deal (compared to shares).
      Our government is not so good at getting taxes out of big businesses, so the society will likely lose in the long term.

  • Asti on 02/09/2025 - 11:56

    I don't think NG removal will have long term effect on house prices, it will probably dip a little then return to normal levels. The demand for property will always be there as long as immigration continues at the current rate. Which government is hell bent on doing.

    NG removal will just mean more taxes can be collected, which I think is a good thing. Why the Australian tax payer should subsidise an overpriced IP purchase by a speculator is something I'll never understand.

  • czau on 02/09/2025 - 12:23

    I would actually prefer option 4:
    You are not allowed to claim property investments loss against other streams of income in two consecutive years.
    This would remove negative gearing tax savings as part of your investment decision while still helping investors to soften the blow of a singular bad events like vacancies etc.

  • dlakers3peat on 02/09/2025 - 12:28
    +3

    I have 2 investment properties and negative gearing had no influence in buying those properties.

    I bought them simply because of the potential capital growth and the rental come that assists with the loan repyament.

    Negative gearing is a just a bonus.

  • jaimex2 on 02/09/2025 - 13:42

    I feel like 'abolish negative gearing' is just a term parroted around.

    It's been around since the 1920s, it just lets you deduct expenses from your regular income.

    If you can't deduct the investment expenses off your income you need the investment to be self sufficient.

    So landlords would jack up rent prices till the thing is just self sustaining or sell it sooner as it's just going to pile up losses.

    So if we did abolish it the following would happen:

    Investors would sell off and some people would get to be owner occupiers. If you can't buy there would be no rental market.

    Government would likely be forced to supply social housing to compensate - blocks of apartments, costs kept low.

    Basically soviet buildings. Everyone gets taxed higher to fund it, except the wealthy as usual because they have no money.

  • OzzyOzbourne on 02/09/2025 - 15:09
    -2

    1- all investors would sell and there would be no houses for the people to rent any more. On the flip side prices would drop so people could afford to buy again. However the ponzi scheme has gotten so out of control that it would have millions in negative equity, not always a problem if you don't sell and can afford the repayments, but most investors are probably counting on an increase in value.
    We've gone so far down the rabbit hole that if we try to dig our way out we'll find a nuclear waste land.

  • netjock on 02/09/2025 - 19:23

    Do the maths. If you can't neg gear

    Your cost can only equal your income. Therefore rents will (try to) rise. Or capital values will come down (like land tax causing investors to flee in VIC).

    It depends on how the mechanics of the legislation works. If you carry the loss until you go into profit (like businesses do) at some point property become positively geared.

  • Corza000 on 02/09/2025 - 20:09

    This has already been modelled extensively. If negative gearing was changed, most modelling shows house prices would only dip a little around 1–2% (Grattan Institute, NSW Treasury, Peter Tulip) so it wouldn’t “solve” affordability. It could make the tax system fairer and might slightly improve ownership rates, since investors compete less with first-home buyers.

    The trade off is rental supply would likely fall faster than rental demand (because not everyone renting can or wants to buy), which is why groups like Grattan and the PBO flag potential upward pressure on rents. So it’s mainly about equity and budget fairness, not a silver bullet for the housing crisis.

  • whitepuma on 03/09/2025 - 08:20

    I don’t think negative gearing will disappear altogether. If change does come, it’s far more likely to be in the form of a cap rather than an outright end date.

    That cap could be structured in a few different ways—based on property value, number of properties, or even the total losses you can claim in a given year. The idea would be to protect small-scale investors who might own one or two properties to help fund their retirement, while limiting the outsized benefits going to large-scale investors.

    Right now, someone with 10 or more properties can run each one at a loss, claim it all back against their taxable income, and still enjoy long-term capital gains. That’s not really a safety net—it’s a strategy that shifts risk and cost onto the tax system. Putting a cap in place would still allow ordinary investors to benefit, but it would rein in those who are clearly taking advantage of the policy.

    • Jolakot on 03/09/2025 - 14:41

      That person is still losing a significant amount of money every year, at most you'd get just under half of it back at the highest marginal tax rate, which would have to be the case because you'd need insane cash flow to negatively gear 10 properties.

      If those rental properties are making a loss, then the current rent is lower than it would be without negative gearing. The landlord would have to either raise the rent, lower their costs, sell it to a home buyer (best outcome), or sell it to a larger and more efficient investor (mom and dad investors are typically the least efficient)

      You'd slightly lower property prices and increase home ownership, while making rental houses even more scarce and expensive and centralising ownership.

      Unquarantined negative gearing is pretty stupid, you should only be allowed to claim prior losses from an investment property against its own future gains, not your personal income from any source.

      You'd have a much bigger impact by scrapping the half-off CGT discount Howard introduced, which is coincidentally right around the time when housing affordability went to crap.

      I get taxed on phantom gains from inflation adjustments to my salary and my bank account interest, so that's always been a flimsy reason to keep it around. Asset investors shouldn't get better tax treatment than a professional investing into their own business.

  • dufflover on 03/09/2025 - 14:22

    Just because removing NG "may not significantly" impact housing affordability still isn't a reason to keep it …
    And sometimes that's the only reason people give to not get rid of it.

    Don't agree with the whole concept of it at least with this asset class and to other income types.

    But no, as others have said, no one is going to politically have the will to do it for a while, if ever.

    • Jolakot on 03/09/2025 - 14:56

      That would be valid if removing NG didn't come with downsides, you get a small positive impact to housing affordability and a small negative impact to rental affordability.

      Absolutely worth quarantining it though, so you can only claim investment property losses against its own future gains not personal income. Right now it's a stupid loophole for reducing personal taxable income that disproportionally benefits high income earners more than anyone else.

      Better to get rid of CGT discount and fix the core incentive.

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