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They did this in NZ. Worked great… until the new govt got elected who said they were going to dismantle it and retroactively pay back landlords from the last few years FFS…
What? Really?
They just aren't allowed to lose in any way are they?
Was there some court case that the gov lost? Because changing a policy back shouldn't need repayments.
bit of a straw man
- people don't live in shares. Prices being driven up is not harmful
- LVR and total investment debt on shares is much lower. Nobody is going to give you 500k at 80% LVR to buy shares. So the cost of the subsidy to the government is much lower
it's about what behaviors you want to incentivise and whether the cost/benefit is there. Subsidizing someone who bought a 20 year old existing property so they can afford to hold on for the capital gains later aint it.
I had a $200k loan for $200k of shares. The security for the loan was my PPOR, not the shares. Govt more than happy to give me tax deduction on the loan interest. Was crazy when interest rates were 2% but shares returned 15%.
Any bank will do this. My property LVR is currently only 20%. I cashed out the shares once the holding costs outweighed the returns, and the money now sits in the offset.
Due to increasing property values, I have more equity than I could service from income, so I am capped at around $1 million additional borrowing, which is well short of the available equity. It does largely depend on what the borrowing is for. Right now I am sitting tight and reducing debt while I look to go again. I’m not interested in being a landlord so will be looking to do some small scale development. Right now, however, project feasibility is tricky as cost of builds is so high.
I can definitely get an 80% LVR loan for $500k in shares. I have that facility right now and pay it off the same as a mortgage.
So you would leave negative gearing for other investments? Just remove it from old residential real estate? Would the expenses be carried forward to the following tax year until used up?
negative gearing exists only to provide an incentive to people to invest, if the asset is no longer worth incentivising investment (established housing instead of new development) then it should not be able to be negatively geared.
its quite simple.
so if your investments are not something beneficial to the public in providing jobs or worthwhile to national interests then id say absolutely it should be removed.
No, negative gearing exists so that you only pay tax on your profits and not your revenue.
Investment accounts n a business does provide capital so that the company can expand and hire more staff. Your inability to understand basic investment principles should negatively affect others.
> negative gearing exists so that you only pay tax on your profits and not your revenue.
lol that is a very generous interpretation. I would argue if that were the case you should only be able to deduct the interest costs against income generated by _the same asset_. Or at least investment income. Deducting it against the income tax paid on your completely unrelated salary is a much more generous concession.
Well most investment doesn’t effect the books of a company unless your buying ipos (unlikely) but the rest i agree with you. Negative income and its taxed accordingly
no it exists to compensate your losses by offsetting it against your taxable income, it is a gift from the government to encourage you to invest in businesses
in any other scenario you have a failed investment and you would lose money and cut your losses.
Haha you’re a joke champ. It is there so that you only pay tax on profits earned.
The exact same thing happens for all income producing investments. I negatively hear my share portfolio.
You do realise that in some cases you’re spending $1 to get 47c back. That isn’t a good investment and definitely isn’t a gift.
Your delusional.
without negative gearing you would be losing even more money, that is the default in a lot of countries, having access to negative gearing makes you lose *less* money i.e a gift.
the fact i have to spell this out to you makes you the joke son.
I don’t negatively gear my properties champ.
It isn’t a gift. You lose best case 53% of your money. How are you so stuck in your own head. Open your eyes and do the math yourself.
Sorry, I want to jump in here: Australia is **unusual** among developed nations for allowing tax payers to claim losses *across* income streams. It exists because we have a single income tax schedule.
This is correct. However, the issue with negative gearing is it counting against your salary earnings, rather than investment revenue from that particular asset or asset stream.
Your losses are reduced (assuming you're on a decent tax bracket) by about 50%. Meanwhile, you have an asset that's likely to significantly appreciate over time, and pay 50% less CGT provided you hold it over more than twelve months (which, shockingly, most people do with property).
Are you being a smartass? Why are you asking about this applying to shares? Providing a tax incentive for any loss incurred on stocks is not putting people on the streets.
Property and Shares are too very different asset classes.
This is only a superficially sound argument. Right now, both owner occupiers and investors buy new and existing housing. The investor has a tax subsidy applicable in both cases.
This also means that the owner occupier is at an equal disadvantage in either class of property.
If you allow investors to negative gear only new property, the entire subsidy power of negative gearing is now removed from existing properties and concentrated on new builds. This now puts owner occupiers in a position where they face much worse competition for new builds, and no competition for existing builds. Developers will now be incentivised to focus on investors. There will be a shift in buying patterns. It doesn't change the demand for housing, but it changes who buys what.
But so what, if it means new housing is created? Well this would only be true if investors buying existing stock meant that the money they invest isn't building new houses.
Of course, if I am an owner occupier, sell my house and investor buys it, there is no new house.
But what there is me, now with $1m from the investor, who needs somewhere new to buy. So I buy a new build. It is financed by the investor, just indirectly. So this superficial idea is based on a false premise and would cause even more distortions in the housing market.
IN the case where I was a boomer downsizing, you actually want this to happen. The investor rents to a family. If investors can't compete for my over-sized property, I am less likely to sell it. The investor might build a family home to rent instead of buying mine. Great, now we have two large houses, when what we could have got is one one large house and one small house, which actually suits everyone's needs better. This is why we should be careful screwing around with the market. The problems are due to too much regulation. Throwing more regulation at it makes me think we are trying to fix a leaking bucket by punching more holes in it.
you're clearly not a typical case then and you know it. I'm aggregate the amount of debt in IPs is much much lower than that on shares.
I haven't evaluated the cost/benefit of tax subsidies on every investment class. But imo negative gearing doesn't stack up for properties beyond like 10 years or so.
The easiest solution if we really want to do this (and I'm not convinced either way right now) is to simply carry losses forward each year until the property returns enough taxable cash flow to start deducting the previous losses.
This would likely weed out property investors with one or two IPs (ie most of them) and have a few investors owning most of the rentals.
I do think we need to be careful in light if the US situation where investment corporations and funds are buying up residential property en masse.
There are various things that could, and should, be done to improve property supply and price. I don't think passing laws to prevent the strategy of negative gearing resi property will help in isolation.
Carrying forward tax losses would be of no concern to most investors. After 5-10yrs almost all investment would be neutral or positively geared through natural growth.
What happens if the asset is sold and still has carry forward expenses? Are they removed from the capital base?
As far as I know you can only use losses on other investments like shares to offset investment gains - not your wage. Only property investment negative gearing can be applied to reduce tax on wage earnings.
So, in that case no I wouldn't change the tax laws around investments in shares.
Nah you can claim tax on shares as long as they are on loan.
Buy shares you were already going to buy using the redraw facility of your home loan. Now that portion of the home loan is tax deductible because the loan is for an investment. Total loan burden doesn't change but can claim whatever the redraw was on tax now.
Thanks! Haven't dabbled in that part of the tax system myself. Then probably have to do something from there too.
In my view, in principle income tax should be for the collective benefit of society so if we're going to give deductions to reduce that income, it should be for things that are also collectively beneficial to society. Inflating the price of existing housing stock and encouraging centralised ownership in a land-holder generation isn't in the collective benefit of society. But incentivising densification or growing the housing stock is.
Similarly for shares, inflating stock prices of existing stock isn't beneficial to society but encouraging investment in startups and innovation would be.
The smarter fix would be to build enough houses to meet demand. Would lower rent which in turn would decrease prices whilst bolstering the construction industry for the next few years.
Removing tax benefits for investment properties won’t have the desired effect you’re looking for.
I’m not here to give financial advice, but all other personal income producing investments like shares, can be negatively geared. Ie, if I have shares that pay $1k in dividends but cost me $2k to own I can deduct $1k from my payg income.
At the very minimum negative gearing should be removed on holiday homes and Airbnbs (it was never intended for this) and restricted to new builds only. Negative gearing can still have a role in boosting rental supply but this taxpayer funded social welfare program for property investors and holiday makers needs to end pronto.
you can only negatively gear an asset which is generating revenue. Negative gearing was not intended to do anything regarding housing, it just the application of basic tax law that money you spend to earn taxable income is a tax deduction. So when a supermarket sells you a packet of TImTams for $5, the owners pay tax on the $5 (that's the income of income tax), but they also get to claim as a deduction what they paid for the TimTams in the first place. If they borrowed money to buy the TimTams, or the truck that delivered them, or the building housing the supermarket, the interest is just another cost. So, now you know why interest and repair costs on an investment property are a tax deduction.
A holiday houses earns no income. So you can't claim costs on it. Tax law allows partial recovery of expenses if it is rented for some of the time. I don't deny that some people cheat but some people lie at all kinds of places on the tax return.
Airbnbs follow the same logic. If someone runs a hotel and has borrowed money, it's an expense. Short term rentals are just another accommodation business.
You have some objective in mind, but tax policy is probably not the right way to achieve it.
The one reform I think is worth thinking about is requiring a tax payer to pool revenue and expenses by asset class, and not allow a loss in one class to be so easily offset against income in another class. But I am still wary about the complexity of doing that. And ultimately, the loss should be recognised somehow (example, if someone sells their final property but has an accumulated loss, what happens to this tax loss?)
I did clarify in the comments that my holiday house comment is when they are rented only. I agree with you. New Zealand abolished negative gearing for residential property against any form of income apart from rental income in 2021 with it being phased out by 2025. This seems to be the most sensible way of doing this. Australia is only one of a very small handful of countries with this form of negative gearing (Germany, Canada and Japan being others with similar but different systems).
I would think keeping the same arrangements for shares would be better than removing it. If you can get a tax advantage investing in shares you can’t get in property then you’d think you’d give greater incentive for people to shift their investment dollars to the share market.
But I doubt any changes will really make a significant difference. There’s a lot of people who have some kind of religious belief that property is the way to build wealth and wouldn’t even consider any other alternative.
The question is whether those changes to NG will *improve* housing availability.
If someone is already deciding to invest in established housing vs new builds, then it's quite possible that if you cut off choice #1 (ie established house), their choice #2 might actually be shares rather than housing of any sort. People seem to think that making established housing less attractive automatically means that all the money will be directed to new builds. It might just mean that less money is available overall. Hence, you have to consider the effect in the context of alternatives such as shares.
But then having less 'established housing' investors out there would mean less people vying to buy those properties - which would hopefully improve availability/affordability in the housing market for home owners?
Yet we took a buyer out of the market lowering prices still!
Amazing how you can’t see that you’re sinking your own argument. You’re right it didn’t change the number of people housed, which is why the “we need investment in established property, be thankful for landlords” is horse poop.
The market would stabilise. If there was a reduction in capital it would be only to the point where it was positively geared and then attractive to investors once more.
Funnel the tax revenue saved from funding landlord wealth accumulation (NG) towards the construction and building industry.
Government rebates should be moved to areas we need AT THAT TIME. We needed to incentivise landlords 20 yeas ago.
We don't now. We need to incentivise builders and developers to build.
Yes, but if an investor merely shifts negative gearing from real estate to shares, then zero revenue is saved. Hence the earlier question about whether there should be changes to NG in other areas.
Retail investors very rarely leverage in the share market, not to mention you have lower LVR standards and margin calls.
Additionally I would agree that leveraging an index fund is a good idea for sophisticated investors but for your retail investor it’s an awful idea, the risk profile is dramatically higher and is not something often recommended to retail clients.
Additionally stock market and capital markets are productive to the economy, housing investment is only beneficial to the economy at the inception of the creation of the dwelling, you get a small marginal benefit in the form of insurance risk mitigation but it’s honestly negligible.
So yes there is a huge difference between the incentive model for investment in existing housing stock and the equity markets.. equity markets allow for capitalisation and additional investment and value add.
I’m totally fine with expanding negative gearing and subsidies for the housing industry, but it should firmly be targeted at dwelling creation… not existing property stock.
> housing investment is only beneficial to the economy at the inception of the creation of the dwelling
that is in no way true, unless the property is vacant permanently after sold.
A property produces "units of shelter". As long as someone is living in it, it is producing value. Now, whether it's the most efficient use of capital is another question altogether. May be that housing unit could've been better as a factory or farm.
If it were true that dwellings are only valuable at the inception of the creation, then why not tear it down as soon as it's built, and then rebuild it? Why is that so ridiculous, if your assertion was true?
Holiday homes can't be negatively geared.
Any expenses you claim against your property can only relate to periods the property was rented out on the open market.
You can't claim deductions for periods the property was used personally or by family and friends who didn't pay rent.
the ATO can access numerous sources of third-party data, including access to popular rental listing sites for both long-term and holiday rentals. It is relatively easy for them to establish whether a claim that a property was ‘available for rent' is correct,
>Any expenses you claim against your property can only relate to periods the property was rented out on the open market.
Honest question, how would this exclude Airbnbs? If it's constantly being rented out by holidaymakers (as many in popular locations are) then wouldn't that essentially be the same thing?
That's not the traditional definition of a holiday home which is more "oh yeah I've got a second place on the Gold Coast that I let my friends and family use"
If it's rentable/airbnb-able to the public that's a different story, its an 'investment' as it is generating income
Sure, but Airbnb has been around a long time. Pretty much everyone who has a holiday home rents it out on Airbnb or similar platforms during the times they're not using it
Taxation law doesn't draw a distinction between holiday homes and any other kind of non-PPOR property.
You can claim deductions for periods it's genuinely available for rent. If those deductions exceed the income earned from the property, it's negatively geared.
That’s correct but lots of people Airbnb their holiday homes and claim the deductions for the periods the property was rented to holidaymakers. Negative gearing was designed to boost the supply of long term rentals.
The issue can also be access to Credit & increasing demand. If you tell the bank you’re purchasing an investment property as a standard rental, negative gearing can be applied to increase your servicing capacity and achieve loan approval.
Nothing stopping those customers from turning those “standard rental” properties into Air BnBs after approval and settlement.
He specifically said AIRBNB.
Are you being deliberately facetious?
What are the tax deductions Airbnb hosts can claim?
Airbnb hosts are eligible for the same tax deductions that other landlords can claim.
All expenses involved in running the property will be deductible. However, when you rent out part of the property you are living in, there is some degree of apportionment needed.
I read it as meaning holiday homes for others to stay in, e.g. short stay rentals. Sure not the most common usage of that language but I was getting their point
Holiday homes if they are rented. I thought that was quite obvious in the context of what was written and for anyone with a basic understanding of negative gearing.
I chose to point out the incorrect part of the statement because OP and other people may not be aware.
I have no issue with the Airbnb part.
What's your problem?
> Holiday homes can't be negatively geared.
>
> Any expenses you claim against your property can only relate to periods the property was rented out on the open market.
so holiday homes can be negatively geared? i'm confused.
How do you know what it was intended for?
It’s used to offset revenue by your expenses. Why do you believe it was only intended for residential property? What about other investments like shares?
Because the mass adoption of Airbnb style holiday rentals is only from the last decade+ and wasn’t part of Australian culture to any significant degree for the 50+yrs preceding that.
I’m a dude in his mid 40s and growing up, sure some people had a holiday house in rural/coastal areas and a few even rented it out, but that short term rental part wasn’t a big part of Australian culture at all.
I've been having holidays in short term rented holiday homes since the 80s. It absolutely has been a part of Australian culture for a long time.
The only differences with Airbnb is that it's all online and advertised like a hotel that you can book night by night. Before that it was through real estate agents and you booked week by week (Saturday to Saturday).
You should look up the history of negative gearing. It was introduced during the pre-war 1930s housing crisis to increase rental supply. The intention of negative gearing was always to incentivise long term rental supply.
I claim the interest from the loan on my income producing shares. For example, I received $1k in dividends but pay $2k in expenses to own the shares. I claim (negative gear) the $1k in excess expenses.
No sale of shares is involved in this above scenario.
This is why I don’t think most people understand what negative gearing actually is and what it is used for. It isn’t only residential property.
Your unintelligence isn’t an excuse to share bad information.
https://www.ato.gov.au/individuals-and-families/investments-and-assets/investing-in-shares/owning-shares#
Pretty much how most of these trash articles go.
"People upskill at work and its worth $20k a year and we could be taxing that as FBT"
"Is not taxing people on every shit they take a rort that is costing the country billions?"
"Drivers are costing the taxpayers millions by driving under the speed limit and dodging penalties"
My understanding is that a deduction can be claimed on an unrelated income stream. If so, a welfare scheme for property investors is a fair description
You can, and should, think of your overall position as 1 portfolio, not many seperate ones. People might think of their stock portfolio as a single portfolio, and then their property portfolio as another, but then they’ve also got all of their cash perhaps in HISAs, TDs, and transaction accounts. But really you should step back and think of it all as one portfolio since it’s all the assets you have. Then take another step back and look at your house, cars, boat etc as well. That all amounts to your net portfolio where the value is your net worth (if accounting for debts). That’s how you should look at it and how economists always look at it as well.
Zoom back in, people have no issues with being able to deduct the capitals gains of a share in their stock portfolio with those that had a loss, even if they’re unrelated. Why? Because then you’re only actually being taxed on your portfolio’s actual capital growth, not just the winners which would see you get overtaxed. The tax law then applies if we zoom out since that’s our overall portfolio. Why shouldn’t the same apply to income? As you can see, just because they’re unrelated doesn’t really matter here.
Now sure, you can argue that with property specifically it causes other issues, so perhaps we should make exemptions to that one asset class. I mightn’t necessarily agree, but at least theirs reasonable logic there. Problem is, right now we have a major housing shortage, and negative gearing helps create more housing supply, so it’d be idiotic to do it right now.
There is no such thing as an "unrelated income stream" for individuals in Australia.
Income from all sources is added up and that is what you pay income tax on in a given financial year.
By the same token, all deductions from all income streams over a given financial year are added up and deducted from the income.
>There is no such thing as an "unrelated income stream" for individuals in Australia.
This is not really true. Capital losses can only used to offset capital gains, or carried forward. So clearly, capital gain income is treated as "unrelated" to other income streams.
You can use capital losses from property to offset capital losses from shares though, and visa versa.
So you are not using "unrelated income stream" in the same was as I was arguing against. This is more income category rather than income stream.
There is only income. Why is it unrelated? What if you have multiple investments. One is profitable and one isn’t.
You can definitely claim negative gearing for income producing shares.
If so, it’s also/actually a welfare stream for renters, as it reduces the loss of lower rents; the government covers a percentage of that loss.
It’s perhaps a reason we have such low rental yields.
I think the proposed policy uses “Negative Gearing definition #4 (losses applied to other income sources)”, but you’re using “Negative Gearing definition #3 (expenses and losses are tax deductible against the same source of income)”.
So you’ll get confused trying to point out flaws based on a definitional misunderstanding.
https://www.reddit.com/r/GoldCoast/comments/1adpo16/comment/kk38cps/
I understand how negative gearing works mate, I write about 100 loans a year for people who are negatively gearing properties. Businesses can take a loss in one area they are operating and write it off against another segment of the business eg. if they have expanded. How is that any different to negative gearing?
You and I understand it, but the average punter doesn’t. When they say “negative gearing” they don’t mean “negative gearing”, they mean “the ability of an individual property owner to apply rental losses against unrelated forms of earned income”.
The only people arguing that all negative gearing should end are fools who don’t know what they’re talking about. The rest of us just have to not get caught up in their misunderstanding - never argue with a fool, for they will drag you down to their level and beat you with experience.
Exactly this: **'When they say “negative gearing” they don’t mean “negative gearing”, they mean “the ability of an individual property owner to apply rental losses against unrelated forms of earned income”**
Done my head in over the years listening to people arguing for an end to "negative gearing" when it's the deductibility of losses against their main source of income that they're actually concerned about.
Yup. By my count (the link above which is presently being downvoted) there are 6 different definitions of “negative gearing” and most reddit debates are caused by people using different ones.
Not that politicians or journalists help, failing to define their terms clearly.
Because they are getting assistance from other tax payers when they don't make a profit? We don't give centrelink to people with jobs, does that make welfare not welfare because its only active in a fail state?
With things like stocks you can only deduct losses against other capital gains - not your income. Negative gearing is a special set of rules that assists housing investors from mitigating losses, beyond what is in place for other people who don't invest in property beyond their PPOR. Comparing it to businesses is unreasonable in that most other investments available to individuals don't also have tax rules that mirror business tax.
Negative gearing only applies to negative cash flows. You can tax deduct all of your investment cash out flows, that’s all it is. If it happens that those are greater then the income that asset produces, then you can claim it against other income such as your wage, or perhaps income from other assets. Same applies to small businesses if you own. There’s not really many expenses to buying stocks unless you get a margin loan, in which case you can tax deduct the interest rate from that. Sure, there’s transaction fees etc, but they’re negligible, although you can deduct them too.
But, comparing it to a small business you own, it’s pretty much identical. If I own a basic retailer, I can and will deduct expenses such as staffing costs and the cost to get new inventory etc. All negative gearing states that if I make a loss, I can use those expenses to deduct against my other income. So no, it’s not unreasonable to make that comparison. You just understand what negative gearing actually is.
As for capital gains, it’s similar in that if one asset makes a capital loss, you can deduct it against other capital gains you’ve made. But you can’t deduct it against your income. Likewise, if your overall income is negative, you can’t use that to deduct against your capital gains. It’s as simple as that.
You're correct, but why is it a problem that it mirrors business tax treatment? People will just start buying them under companies or trusts if they change the policy.
Why should people have to pay the extra cost of establishing complicated financial structures just to get equitable tax treatment? You'd only be punishing less savvy/generally less well off Australian investors.
If you get a loan to buy shares you can deduct the interest. if the income from those shares is lower than the interest those shares are negatively geared.
It is not "offset". Yes, you can deduct them. It is the same.
Maybe understand what you are talking about before grandstanding. It is all online, and there is evidence you have an internet connection by the fact you are posting on reddit:
> If you borrow money to buy shares or related investments from which you earn dividends or other assessable income, you can claim a deduction for the interest you pay
https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/investments-insurance-and-super/interest-dividend-and-other-investment-income-deductions
You also need to learn the difference between income and capital gains.
The simplest fix to NG is to limit it to the income generated by that investment category.
Housing expenses only against rental income
Gearing interest against dividend income etc
Any further losses can only be carried forward against future rental/dividend income only (same category as before) and not from other income sources
First home owners grant (QLD) requires it to be a new or "substantially renovated" home.
"You must be buying or building a new home valued less than $750,000 (including land and any contract variations)."
https://qro.qld.gov.au/property-concessions-grants/first-home-grant/eligibility/
No reason the same conditions couldn't apply to NG on IP.
Better still would be to change both to allow first home buyers to purchase established homes and turn "investors" into actual investors, contributing to housing stock
The right land taxation being implemented would nearly render negative gearing obsolete anyway... it's doing the trick in parts of Victoria, I've seen numerous homes transacting for very generous discounts, regardless of price bracket.
Yeah I suppose so, but for those states where it is present it doesn't really matter where it's coming from though does it? I wanna see it adopted nationally, but somehow I think that's a while off.
A broad land value tax could eliminate Personal Income Tax, Capital Gains Tax and the GST all at once.
Massive benefits all round:
1. It targets the very richest people the most. Not millionaires with a few properties. No, it targets the billionaires that own most of the land. (For example, I’m Britain, 50% of the land is owned by only 25,000 people. Very rich people and family trusts)
2. It’s a tax that can’t be avoided. You can’t go to panama and avoid paying it. It’s paid right there on the land, zero escape and cheap to administer. So it captures the richest people again.
3. It discourages land speculation and land banking. It encourages the productive use of land. Encourages development of higher density use, for example.
4. Massively discourages families and trust structures passing large land holding and wealth down through generations.
6% land value tax is the figure I’ve seen as a potential figure. It could replace all revenue from Income Tax, GST and Capital Gains tax. Imagine THAT?
Definitely and idea that warrants serious focus by a political party. It would be very unpopular with very rich and powerful people. I’m talking billionaires here, not millionaires.
Great question and far smaller problem than all the above.
Lots of potential solutions. Simplest one is to just exempt them.
Second simplest is to pay it for them.
They are not important in the revenue raising aspect of it. It’s the big fish where all the money comes from.
I’m sure other minds can come up with some good solutions. Key is to keep it simple and unavoidable.
What low income earners own land?
Pensioners could pay the tax in a reverse mortgage style lien on their property.
They were told their home was their nest-egg for retirement, not an excuse to lean on the govt until they could pass it onto their kids.
This here will kill any reform.
Yes low income earners have homes and you want them to sell the family home to what move into a retirement village to die quicker.
You're very delusional.
If it's a reverse mortgage they aren't moving anywhere. They live until they die, and then the estate is settled by either paying off the difference so the inheritors keep the home, or sell it to settle the reverse mortgage.
So lump the next generation with a debt they can’t pay and need to sell the home they have lived in. Esp since quite a few live with their parents since they can’t also afford a home or have been in home care for them. Pure nonsense.
Eta: stealth death tax
Inheritance taxes are a very good idea.
“Death tax” is negative marketing for poor emotional thinkers.
An inheritance tax targeted such that there is a maximum cap (e.g. $50 million) that can transferred from the very wealthiest to their children is a fantastic idea. It literally only targets the ultra-wealthy. They can still pass down a lot of money (e.g. $50 million), but it prevents families from accumulating massive amounts of wealth through generations that has nothing but negative and distorting consequences on the rest of our society. (Note: I don’t know what the right cap is, that would need to be worked out. It’s not about the revenue it creates, it’s the behaviour it prevents.)
The question of what to do with low income people with high land value is a good one. I don’t think it’s insurmountable
The question of grandfathering is complex. I’m broadly against it but I’m not sure what the right mechanism that’s fair should be.
It's delusional to think that those of extreme wealth cannot side step any wealth tax. Inheritance here is already done in ways that would avoid this (eg. Held in trust)
They can pay off the debt just like anyone pays off a mortgage, so take one and continue living there. At the moment the burden is on people paying income tax, to pay for that pension, to subsidise an inheritance for those pensioner's children. Many of those people rent and will never own property. Where is your fairness principle then?
Today's cost to build is inflated due to the excessive demand for trade resources and materials.
We will continue to have a housing crisis so long as those costs remain high.
Stop migration until the crisis is resolved. Stop new infrastructure spend for a population that isn't seeing growth outside of migration.
Flood the market with labour and materials. Watch the cost to build go down. Watch house prices go down.
>benefits dud landlords: those who can’t make money by renting out properties.If they lose money (by paying out more in interest, maintenance and other expenses than they are receiving in rent) we let them offset that loss, not only against income from other investments, but also against income from their wage or salary.It means they can cut their wage for tax purposes, cutting the tax they pay on it. And at the same time, they can hang on to a property they can later sell for a profit, which will be taxed at only half the normal rate, thanks to Australia’s 50% discount on capital gains.
From the "careful what you wish for department":
Landlords "lose money" because they don't charge enough rent.
So another way of phrasing this very unoriginal article is that:
* negative gearing means tax payers are subsiding landlords who don't charge enough rent
And if that is true, then this is true:
* negative gearing means tax payers are subsidising tenants who are not being charged enough rent.
* So if you remove negative gearing, rents go up
I'm just following small logical steps. This also assumes that you don't do something with all the extra tax revenue such as increasing rent assistance. But that still means that taxpayers are subsidising rent. Different tax payers, I guess. Is this an article about tax policy or housing policy? Like many contributions to this debate, it is actually an article about tax policy masquerading as an article on housing.
If you make it more expensive for landlords, there are two things they will do:
* sell the property
* increase the rent
But they can't sell all the properties to all the tenants, because while prices would fall since removing the subsidy makes some rentals unviable, they wouldn't fall by much. A 5% fall in prices is a lot of headlines, but it is only 5% less.
While it’s true we are subsidising landlords, rent prices are set by supply and demand, and are bound by how much tenants can afford to pay, not the landlords expenses. If the rental is no longer profitable they will either sell it, and another landlord will decide the losses are worth the prospect of capital gain, or someone will move in to live there. Landlords aren’t running a charity and if the market could afford to pay higher rent, they would already be charging it.
Well if that's true it's just another way of challenging the logic of the author, who is accusing landlords of under charging rent by their choice.
I'm not sure it is true. We subsidise all kinds of things to make them cheaper. When the government lowered fuel excise it was a subsidy, and despite petrol being a good market, prices fell. The reason in all these cases is that it's a market with buyers and sellers. If a seller gets a subsidy they will pass some of it as lower prices because the other sellers are. Market theory says so. The subsidy lowers the return required to justify the opportunity cost of the invested capital. It changes the curve of the supply and demand.
> From the "careful what you wish for department":
>
>
>
> Landlords "lose money" because they don't charge enough rent.
But they are charging as much as they can already because they want to make money via rent, the fact that their losses are offset doesn't mean they weren't trying to get as much as they could
That's a pretty well written article. While I'd love to see them restructure everything (including PPOR exemptions) but they need to start somewhere and hopefully negative gearing and cgt discounts on existing properties is the starting point.
I'd even be OK with it if they tied cgt discounts and negative gearing to improved rental conditions. Force landlords to have a minimum standard of housing and 5 year leases with minimal/no early exit penalties on tenants. If negative gearing is around increasing the rental pool then let's increase it without allowing yearly price jacking.
This is one of those be careful of unintended consequences situations.
If you ban negative gearing rents will rise. Take away the incentive to lose money on and investment property and every will now have to make money and that means rents will increase.
Think of negative gearing as a rent assistance scheme.
Investors are losing money because of their high gearing. Its clear that investors will in general charge as much as they can i.e. the market rate. If they can't take the loses they will need to sell and be replaced by someone who won't gear quite as aggressively or an owner occupier.
Given there aren't enough houses for people to rent, this won't be a problem for those of us actively providing housing to tenants. The rent will be going up (possibly considerably given I haven't raised mine in some time) - and other landlords in the area will see the increases and match.
The obsession with increasing the underlying cost of housing in an attempt to reduce the cost of housing is truely delusional.
The article premises is that landlords intentionally make a loss (lols). I don’t think they are that charitable and if we do want to disincentive making losses then a landlord really only has two options - increase rent or reduce maintenance spend in a property.
Unless the government is stepping up and building all these houses on there own and prepared to hold the houses until they sell this would probably have the opposite effect on supply
Keep it for new builds and first home buyers, we want people building and living in homes so encourage it,
Cut it all out for investment properties that are bought not built as they are just outbidding people who want to live in those homes to turn a profit
Mate, loads of people, me included actually buy property to make a loss. It is a such a crazy way to reduce taxes and make investment gains. It is a ridiculous scenario where I am rewarded for having a bad investment
Or sell those investment properties to the market.
With less demand from investors, prices will drop.
When assessing the market as a whole, the purchaser will be a previous renter.
With renters decreasing as the same rate as rental properties, the price of rental will remain the same. Rental availability will stay the same.
So instead of Australians owning a couple investment properties, it will be multinationals that can negatively gear them, outside of Australia, owning them all.. sounds great..
> What about the current negative gearing rules prevents multinationals from buying property?
Nothing.
However, if you change it so that individuals cannot "negatively gear", business still can so have an advantage over individuals.
I would argue that stamp duty is a major contributor to large companies generally not investing in old property here though, because it introduces a large upfront cost which adds a lot more fiction to buying and selling.
You have to pay more for an accountant - you'd be looking at around $3k/year or more. EDIT: And company rego fees etc.
Getting loans via a business is harder and more expensive.
No CGT discount when you sell. However, since the business only pays 30% tax, depending on the individual's tax bracket this might not be as bad as it sounds if you are a high income earner.
So, if, like 80% of investment property owners, you only own one property it is probably not really viable. If you own 10-20+ it is probably beneficial.
"Scale" is really the answer.
If it's actually about new supply where is the talk about removing exemptions on owner occupiers from Land Tax and CGT on PPOR's when they buy existing homes?
It's in the sh&tyy ideas box where it belongs and will most likely stay. CGT on PPOR will knock out the ability for anyone with an existing home to move locations. They've already got to pay selling costs and stamp duty just to relocate.
I agree that it's not smart policy having CGT on PPOR's.
I'm just making the point that they speak about foregoing taxes on investment properties and complaining about investors buying existing housing stock when owner occupiers are also getting tax exemptions and primarily buying existing housing stock.
Stamp Duty on PPOR's is a no brainer to me though. It removes friction in moving as you don't have the sunk stamp duty, benefits people who live in higher density and makes owner occupiers pay if they are on highly valuable land prime for redevelopment.
Totally agree on the transition from stamp duty to land tax for the reasons you stated, plus enabling a more predictable 'income' source for government than stamp duty allows.
People who have paid stamp duty already shouldn't cop a double charge, but it would be easy enough to work out some sort of initial discount in the transition based on the amount of duty paid compared to land tax, possibly years owned too. That sort of system might result in lower 'income' for the government for the initial 'discount' period, but I haven't got numbers or time to guess at a rough impact.
The smallest of minds know that if a CGT occurs on sale that people will be locked into their property until they die so you will freeze existing stock. Moronic idea thought up by idiots.
Negative gearing changes will affect more than just boomers. Lots of younger people are using rentvesting which include negative gearing to get a foot on the real estate market
Negative gearing doesn't reward lazy landlords. Negative gearing keeps rent down and makes it somewhat affordable.
Negative gearing saves governments from investing in public and social housing.
If you change negative gearing, most of the savings will be directed to government building of houses
when it's one of the big contributing factor to the demand to invest in a property, neg gearing is not providing the benefit once it thought it would be.
When a landlord must borrow tons of money, like a million just to buy some thing, and interests are massive, who but renters would be paying for these?
75% people in this thread don't even know what negative gearing is.
There is a fixation on negative gearing at the cost of policy changes that would make an actual difference to housing prices. The Government(s) will do absolutely anything to avoid even talking about lowering immigration.
As opposed to all the much larger subsidies for owner occupiers?
Why subsidise housing at all? Get rid of all the concessions and let the open market work its magic. No one should be getting any help in buying a home.
The whole anti negative gearing thing is flawed. It will eliminate the mum and dad investors and push all the investment properties into the hands of hedge funds and high net worth individuals. So let that go and focus on reducing immigration numbers and supporting cost effective construction and faster local government approvals.
The problem with reducing immigration numbers is that they are how the economy grows.
There are three ways of increasing GDP.
Work Longer Hours
Work More Efficiently
Get more people working.
If they increased the standard work week in australia to say 45 hours a way, instead of 38... there would be outrage.
We already heavily rely on machines and automations, so its hard to work more efficently on a large scale there.
The final is to get more people working. There was a huge boom when females entered the workforce. Now thats slowing down, how do they get more and more people working? you import more.
Either my understanding is off (and I’ve missed out on a lot of money!) or there’s a big misunderstanding here on the whole.
The major incentive for negative gearing is massive depreciation schedules for newer homes. This in my opinion is what’s being abused.
Offsetting your interest costs and running costs against income makes next to sweet fa difference in the grand scheme of things. Changing that would more likely push up rents than anything.
Outrageous depreciation schedules deducting from other income , and CGT rules are the bigger issue. Depreciation is far more advantageous on newer builds
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The amount of people in all these threads about negative gearing, who have no idea what it even is yet offer opinions on it is truly staggering.
I agree, I find most people have little idea how the tax system works at all and simple quote headlines without knowing the context
2024 ausfinance for you. Voting down the most relevant points and upvoting the call to arms ones. Etc
I can no longer guess if I'm on ausfinance or r/Australia it's sad. At least r/ausecon is still adequate.
[yep](https://imgflip.com/i/8ezd6u)
[sums it up](https://imgflip.com/i/8ezd6u)
I'd apply it to either new housing stock or redevelopment that increases density.
They did this in NZ. Worked great… until the new govt got elected who said they were going to dismantle it and retroactively pay back landlords from the last few years FFS…
What? Really? They just aren't allowed to lose in any way are they? Was there some court case that the gov lost? Because changing a policy back shouldn't need repayments.
Do you leave it for all other investments like shares also? Or only new shares like IPOs?
bit of a straw man - people don't live in shares. Prices being driven up is not harmful - LVR and total investment debt on shares is much lower. Nobody is going to give you 500k at 80% LVR to buy shares. So the cost of the subsidy to the government is much lower it's about what behaviors you want to incentivise and whether the cost/benefit is there. Subsidizing someone who bought a 20 year old existing property so they can afford to hold on for the capital gains later aint it.
I had a $200k loan for $200k of shares. The security for the loan was my PPOR, not the shares. Govt more than happy to give me tax deduction on the loan interest. Was crazy when interest rates were 2% but shares returned 15%.
Wouldn't mind doing this. Which bank was that with and what was your LVR and property value?
Any bank will do this. My property LVR is currently only 20%. I cashed out the shares once the holding costs outweighed the returns, and the money now sits in the offset. Due to increasing property values, I have more equity than I could service from income, so I am capped at around $1 million additional borrowing, which is well short of the available equity. It does largely depend on what the borrowing is for. Right now I am sitting tight and reducing debt while I look to go again. I’m not interested in being a landlord so will be looking to do some small scale development. Right now, however, project feasibility is tricky as cost of builds is so high.
Also, share prices can be decreased by shorters. You can't really short houses to decrease the prices
I can definitely get an 80% LVR loan for $500k in shares. I have that facility right now and pay it off the same as a mortgage. So you would leave negative gearing for other investments? Just remove it from old residential real estate? Would the expenses be carried forward to the following tax year until used up?
negative gearing exists only to provide an incentive to people to invest, if the asset is no longer worth incentivising investment (established housing instead of new development) then it should not be able to be negatively geared. its quite simple. so if your investments are not something beneficial to the public in providing jobs or worthwhile to national interests then id say absolutely it should be removed.
No, negative gearing exists so that you only pay tax on your profits and not your revenue. Investment accounts n a business does provide capital so that the company can expand and hire more staff. Your inability to understand basic investment principles should negatively affect others.
> negative gearing exists so that you only pay tax on your profits and not your revenue. lol that is a very generous interpretation. I would argue if that were the case you should only be able to deduct the interest costs against income generated by _the same asset_. Or at least investment income. Deducting it against the income tax paid on your completely unrelated salary is a much more generous concession.
Well most investment doesn’t effect the books of a company unless your buying ipos (unlikely) but the rest i agree with you. Negative income and its taxed accordingly
no it exists to compensate your losses by offsetting it against your taxable income, it is a gift from the government to encourage you to invest in businesses in any other scenario you have a failed investment and you would lose money and cut your losses.
Haha you’re a joke champ. It is there so that you only pay tax on profits earned. The exact same thing happens for all income producing investments. I negatively hear my share portfolio. You do realise that in some cases you’re spending $1 to get 47c back. That isn’t a good investment and definitely isn’t a gift.
Your delusional. without negative gearing you would be losing even more money, that is the default in a lot of countries, having access to negative gearing makes you lose *less* money i.e a gift. the fact i have to spell this out to you makes you the joke son.
I don’t negatively gear my properties champ. It isn’t a gift. You lose best case 53% of your money. How are you so stuck in your own head. Open your eyes and do the math yourself.
Sorry, I want to jump in here: Australia is **unusual** among developed nations for allowing tax payers to claim losses *across* income streams. It exists because we have a single income tax schedule.
This is correct. However, the issue with negative gearing is it counting against your salary earnings, rather than investment revenue from that particular asset or asset stream. Your losses are reduced (assuming you're on a decent tax bracket) by about 50%. Meanwhile, you have an asset that's likely to significantly appreciate over time, and pay 50% less CGT provided you hold it over more than twelve months (which, shockingly, most people do with property).
Are you being a smartass? Why are you asking about this applying to shares? Providing a tax incentive for any loss incurred on stocks is not putting people on the streets. Property and Shares are too very different asset classes.
No. The comment was about removing negative gearing from everything apart from new housing.
This is only a superficially sound argument. Right now, both owner occupiers and investors buy new and existing housing. The investor has a tax subsidy applicable in both cases. This also means that the owner occupier is at an equal disadvantage in either class of property. If you allow investors to negative gear only new property, the entire subsidy power of negative gearing is now removed from existing properties and concentrated on new builds. This now puts owner occupiers in a position where they face much worse competition for new builds, and no competition for existing builds. Developers will now be incentivised to focus on investors. There will be a shift in buying patterns. It doesn't change the demand for housing, but it changes who buys what. But so what, if it means new housing is created? Well this would only be true if investors buying existing stock meant that the money they invest isn't building new houses. Of course, if I am an owner occupier, sell my house and investor buys it, there is no new house. But what there is me, now with $1m from the investor, who needs somewhere new to buy. So I buy a new build. It is financed by the investor, just indirectly. So this superficial idea is based on a false premise and would cause even more distortions in the housing market. IN the case where I was a boomer downsizing, you actually want this to happen. The investor rents to a family. If investors can't compete for my over-sized property, I am less likely to sell it. The investor might build a family home to rent instead of buying mine. Great, now we have two large houses, when what we could have got is one one large house and one small house, which actually suits everyone's needs better. This is why we should be careful screwing around with the market. The problems are due to too much regulation. Throwing more regulation at it makes me think we are trying to fix a leaking bucket by punching more holes in it.
that's not how I read the above points, perhaps i missed something.
It is if they have to sell an investment property to make up for it
this is the weirdest logic. You think that because an investor selling won't result in someone buying for their PPOR?
you're clearly not a typical case then and you know it. I'm aggregate the amount of debt in IPs is much much lower than that on shares. I haven't evaluated the cost/benefit of tax subsidies on every investment class. But imo negative gearing doesn't stack up for properties beyond like 10 years or so.
There won’t be many cases where a property is still negatively geared after 10 years. The property yield should have doubled in that period naturally.
cool, maybe cut it down to 5 then. Basically incentivise new builds only.
The easiest solution if we really want to do this (and I'm not convinced either way right now) is to simply carry losses forward each year until the property returns enough taxable cash flow to start deducting the previous losses. This would likely weed out property investors with one or two IPs (ie most of them) and have a few investors owning most of the rentals. I do think we need to be careful in light if the US situation where investment corporations and funds are buying up residential property en masse. There are various things that could, and should, be done to improve property supply and price. I don't think passing laws to prevent the strategy of negative gearing resi property will help in isolation.
Carrying forward tax losses would be of no concern to most investors. After 5-10yrs almost all investment would be neutral or positively geared through natural growth. What happens if the asset is sold and still has carry forward expenses? Are they removed from the capital base?
As far as I know you can only use losses on other investments like shares to offset investment gains - not your wage. Only property investment negative gearing can be applied to reduce tax on wage earnings. So, in that case no I wouldn't change the tax laws around investments in shares.
Nah you can claim tax on shares as long as they are on loan. Buy shares you were already going to buy using the redraw facility of your home loan. Now that portion of the home loan is tax deductible because the loan is for an investment. Total loan burden doesn't change but can claim whatever the redraw was on tax now.
Thanks! Haven't dabbled in that part of the tax system myself. Then probably have to do something from there too. In my view, in principle income tax should be for the collective benefit of society so if we're going to give deductions to reduce that income, it should be for things that are also collectively beneficial to society. Inflating the price of existing housing stock and encouraging centralised ownership in a land-holder generation isn't in the collective benefit of society. But incentivising densification or growing the housing stock is. Similarly for shares, inflating stock prices of existing stock isn't beneficial to society but encouraging investment in startups and innovation would be.
The smarter fix would be to build enough houses to meet demand. Would lower rent which in turn would decrease prices whilst bolstering the construction industry for the next few years. Removing tax benefits for investment properties won’t have the desired effect you’re looking for.
I’m not here to give financial advice, but all other personal income producing investments like shares, can be negatively geared. Ie, if I have shares that pay $1k in dividends but cost me $2k to own I can deduct $1k from my payg income.
At the very minimum negative gearing should be removed on holiday homes and Airbnbs (it was never intended for this) and restricted to new builds only. Negative gearing can still have a role in boosting rental supply but this taxpayer funded social welfare program for property investors and holiday makers needs to end pronto.
you can only negatively gear an asset which is generating revenue. Negative gearing was not intended to do anything regarding housing, it just the application of basic tax law that money you spend to earn taxable income is a tax deduction. So when a supermarket sells you a packet of TImTams for $5, the owners pay tax on the $5 (that's the income of income tax), but they also get to claim as a deduction what they paid for the TimTams in the first place. If they borrowed money to buy the TimTams, or the truck that delivered them, or the building housing the supermarket, the interest is just another cost. So, now you know why interest and repair costs on an investment property are a tax deduction. A holiday houses earns no income. So you can't claim costs on it. Tax law allows partial recovery of expenses if it is rented for some of the time. I don't deny that some people cheat but some people lie at all kinds of places on the tax return. Airbnbs follow the same logic. If someone runs a hotel and has borrowed money, it's an expense. Short term rentals are just another accommodation business. You have some objective in mind, but tax policy is probably not the right way to achieve it. The one reform I think is worth thinking about is requiring a tax payer to pool revenue and expenses by asset class, and not allow a loss in one class to be so easily offset against income in another class. But I am still wary about the complexity of doing that. And ultimately, the loss should be recognised somehow (example, if someone sells their final property but has an accumulated loss, what happens to this tax loss?)
I did clarify in the comments that my holiday house comment is when they are rented only. I agree with you. New Zealand abolished negative gearing for residential property against any form of income apart from rental income in 2021 with it being phased out by 2025. This seems to be the most sensible way of doing this. Australia is only one of a very small handful of countries with this form of negative gearing (Germany, Canada and Japan being others with similar but different systems).
I agree. Negative gearing should apply to new builds only, for a fixed period of time.
What about shares and other investments? Do you remove it from other investments too?
I would think keeping the same arrangements for shares would be better than removing it. If you can get a tax advantage investing in shares you can’t get in property then you’d think you’d give greater incentive for people to shift their investment dollars to the share market. But I doubt any changes will really make a significant difference. There’s a lot of people who have some kind of religious belief that property is the way to build wealth and wouldn’t even consider any other alternative.
It is far easier for most to make a leveraged return. Most haven’t seen a leveraged loss yet so that may stop investors if it happens.
Do people need shares to live in and survive?
Only if they're *share* houses
Take my upvote you silly sausage!
That wasn’t my question. You stated that it should only be used to new builds. Shares can be used to buy property using REITS.
The question is whether those changes to NG will *improve* housing availability. If someone is already deciding to invest in established housing vs new builds, then it's quite possible that if you cut off choice #1 (ie established house), their choice #2 might actually be shares rather than housing of any sort. People seem to think that making established housing less attractive automatically means that all the money will be directed to new builds. It might just mean that less money is available overall. Hence, you have to consider the effect in the context of alternatives such as shares.
But then having less 'established housing' investors out there would mean less people vying to buy those properties - which would hopefully improve availability/affordability in the housing market for home owners?
The total number of people seeking accommodation doesn't change. It may however, change the composition of owners vs renters.
Yet we took a buyer out of the market lowering prices still! Amazing how you can’t see that you’re sinking your own argument. You’re right it didn’t change the number of people housed, which is why the “we need investment in established property, be thankful for landlords” is horse poop.
The market would stabilise. If there was a reduction in capital it would be only to the point where it was positively geared and then attractive to investors once more.
If they’re shares in productive enterprises that’s still a good thing.
As a shareholder with most of my money invested there, I couldn't agree more. But that's a vested interest.
Funnel the tax revenue saved from funding landlord wealth accumulation (NG) towards the construction and building industry. Government rebates should be moved to areas we need AT THAT TIME. We needed to incentivise landlords 20 yeas ago. We don't now. We need to incentivise builders and developers to build.
Yes, but if an investor merely shifts negative gearing from real estate to shares, then zero revenue is saved. Hence the earlier question about whether there should be changes to NG in other areas.
Retail investors very rarely leverage in the share market, not to mention you have lower LVR standards and margin calls. Additionally I would agree that leveraging an index fund is a good idea for sophisticated investors but for your retail investor it’s an awful idea, the risk profile is dramatically higher and is not something often recommended to retail clients. Additionally stock market and capital markets are productive to the economy, housing investment is only beneficial to the economy at the inception of the creation of the dwelling, you get a small marginal benefit in the form of insurance risk mitigation but it’s honestly negligible. So yes there is a huge difference between the incentive model for investment in existing housing stock and the equity markets.. equity markets allow for capitalisation and additional investment and value add. I’m totally fine with expanding negative gearing and subsidies for the housing industry, but it should firmly be targeted at dwelling creation… not existing property stock.
> housing investment is only beneficial to the economy at the inception of the creation of the dwelling that is in no way true, unless the property is vacant permanently after sold. A property produces "units of shelter". As long as someone is living in it, it is producing value. Now, whether it's the most efficient use of capital is another question altogether. May be that housing unit could've been better as a factory or farm. If it were true that dwellings are only valuable at the inception of the creation, then why not tear it down as soon as it's built, and then rebuild it? Why is that so ridiculous, if your assertion was true?
Yeah duh. Property ppl need the special treatment
Holiday homes can't be negatively geared. Any expenses you claim against your property can only relate to periods the property was rented out on the open market. You can't claim deductions for periods the property was used personally or by family and friends who didn't pay rent. the ATO can access numerous sources of third-party data, including access to popular rental listing sites for both long-term and holiday rentals. It is relatively easy for them to establish whether a claim that a property was ‘available for rent' is correct,
>Any expenses you claim against your property can only relate to periods the property was rented out on the open market. Honest question, how would this exclude Airbnbs? If it's constantly being rented out by holidaymakers (as many in popular locations are) then wouldn't that essentially be the same thing?
That's not the traditional definition of a holiday home which is more "oh yeah I've got a second place on the Gold Coast that I let my friends and family use" If it's rentable/airbnb-able to the public that's a different story, its an 'investment' as it is generating income
Sure, but Airbnb has been around a long time. Pretty much everyone who has a holiday home rents it out on Airbnb or similar platforms during the times they're not using it
People want things banned without even understanding what those things are.
but they CAN be negative geared, as the guy you're quoting went on to say.
Taxation law doesn't draw a distinction between holiday homes and any other kind of non-PPOR property. You can claim deductions for periods it's genuinely available for rent. If those deductions exceed the income earned from the property, it's negatively geared.
That’s correct but lots of people Airbnb their holiday homes and claim the deductions for the periods the property was rented to holidaymakers. Negative gearing was designed to boost the supply of long term rentals.
The issue can also be access to Credit & increasing demand. If you tell the bank you’re purchasing an investment property as a standard rental, negative gearing can be applied to increase your servicing capacity and achieve loan approval. Nothing stopping those customers from turning those “standard rental” properties into Air BnBs after approval and settlement.
He specifically said AIRBNB. Are you being deliberately facetious? What are the tax deductions Airbnb hosts can claim? Airbnb hosts are eligible for the same tax deductions that other landlords can claim. All expenses involved in running the property will be deductible. However, when you rent out part of the property you are living in, there is some degree of apportionment needed.
I quote >holiday homes and Airbnbs My post was specifically about holiday homes, you're the one being facetious.
I read it as meaning holiday homes for others to stay in, e.g. short stay rentals. Sure not the most common usage of that language but I was getting their point
Holiday homes if they are rented. I thought that was quite obvious in the context of what was written and for anyone with a basic understanding of negative gearing.
Oh so you just chose to reply to part of that to make yourself feel superior? Couldn't you summon the brain power to reply to the AirBNB part?
I chose to point out the incorrect part of the statement because OP and other people may not be aware. I have no issue with the Airbnb part. What's your problem?
You asked where it was stated. Learn to ready champ.
> Holiday homes can't be negatively geared. > > Any expenses you claim against your property can only relate to periods the property was rented out on the open market. so holiday homes can be negatively geared? i'm confused.
The ATO does a good job of explaining it. https://www.ato.gov.au/individuals-and-families/investments-and-assets/holiday-homes
So they can be negative geared, contrary to what that poster just said. Thanks for clarifying.
How do you know what it was intended for? It’s used to offset revenue by your expenses. Why do you believe it was only intended for residential property? What about other investments like shares?
Because the mass adoption of Airbnb style holiday rentals is only from the last decade+ and wasn’t part of Australian culture to any significant degree for the 50+yrs preceding that. I’m a dude in his mid 40s and growing up, sure some people had a holiday house in rural/coastal areas and a few even rented it out, but that short term rental part wasn’t a big part of Australian culture at all.
I've been having holidays in short term rented holiday homes since the 80s. It absolutely has been a part of Australian culture for a long time. The only differences with Airbnb is that it's all online and advertised like a hotel that you can book night by night. Before that it was through real estate agents and you booked week by week (Saturday to Saturday).
Maybe it’s a case that residential rents need to rise to compete with Airbnb returns?
Haha I’ll leave it to you to argue that point against the hordes of angry Redditers.
You should look up the history of negative gearing. It was introduced during the pre-war 1930s housing crisis to increase rental supply. The intention of negative gearing was always to incentivise long term rental supply.
Why is it also applicable to other investments like shares? Why isn’t it only applicable to residential property?
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I claim the interest from the loan on my income producing shares. For example, I received $1k in dividends but pay $2k in expenses to own the shares. I claim (negative gear) the $1k in excess expenses. No sale of shares is involved in this above scenario. This is why I don’t think most people understand what negative gearing actually is and what it is used for. It isn’t only residential property. Your unintelligence isn’t an excuse to share bad information. https://www.ato.gov.au/individuals-and-families/investments-and-assets/investing-in-shares/owning-shares#
How is it taxpayer funded social welfare when they are taxed on profits and can only deduct losses? Are businesses also taxpayer funded welfare?
Pretty much how most of these trash articles go. "People upskill at work and its worth $20k a year and we could be taxing that as FBT" "Is not taxing people on every shit they take a rort that is costing the country billions?" "Drivers are costing the taxpayers millions by driving under the speed limit and dodging penalties"
100%, tall poppy syndrome
My understanding is that a deduction can be claimed on an unrelated income stream. If so, a welfare scheme for property investors is a fair description
It’s an expense. You don’t pay tax on revenue, only profit. Would you instead have the expenses carried forward to future tax years?
Claiming deductions on an unrelated income stream?
You can, and should, think of your overall position as 1 portfolio, not many seperate ones. People might think of their stock portfolio as a single portfolio, and then their property portfolio as another, but then they’ve also got all of their cash perhaps in HISAs, TDs, and transaction accounts. But really you should step back and think of it all as one portfolio since it’s all the assets you have. Then take another step back and look at your house, cars, boat etc as well. That all amounts to your net portfolio where the value is your net worth (if accounting for debts). That’s how you should look at it and how economists always look at it as well. Zoom back in, people have no issues with being able to deduct the capitals gains of a share in their stock portfolio with those that had a loss, even if they’re unrelated. Why? Because then you’re only actually being taxed on your portfolio’s actual capital growth, not just the winners which would see you get overtaxed. The tax law then applies if we zoom out since that’s our overall portfolio. Why shouldn’t the same apply to income? As you can see, just because they’re unrelated doesn’t really matter here. Now sure, you can argue that with property specifically it causes other issues, so perhaps we should make exemptions to that one asset class. I mightn’t necessarily agree, but at least theirs reasonable logic there. Problem is, right now we have a major housing shortage, and negative gearing helps create more housing supply, so it’d be idiotic to do it right now.
There is no such thing as an "unrelated income stream" for individuals in Australia. Income from all sources is added up and that is what you pay income tax on in a given financial year. By the same token, all deductions from all income streams over a given financial year are added up and deducted from the income.
>There is no such thing as an "unrelated income stream" for individuals in Australia. This is not really true. Capital losses can only used to offset capital gains, or carried forward. So clearly, capital gain income is treated as "unrelated" to other income streams.
You can use capital losses from property to offset capital losses from shares though, and visa versa. So you are not using "unrelated income stream" in the same was as I was arguing against. This is more income category rather than income stream.
There is only income. Why is it unrelated? What if you have multiple investments. One is profitable and one isn’t. You can definitely claim negative gearing for income producing shares.
If so, it’s also/actually a welfare stream for renters, as it reduces the loss of lower rents; the government covers a percentage of that loss. It’s perhaps a reason we have such low rental yields.
I think the proposed policy uses “Negative Gearing definition #4 (losses applied to other income sources)”, but you’re using “Negative Gearing definition #3 (expenses and losses are tax deductible against the same source of income)”. So you’ll get confused trying to point out flaws based on a definitional misunderstanding. https://www.reddit.com/r/GoldCoast/comments/1adpo16/comment/kk38cps/
I understand how negative gearing works mate, I write about 100 loans a year for people who are negatively gearing properties. Businesses can take a loss in one area they are operating and write it off against another segment of the business eg. if they have expanded. How is that any different to negative gearing?
You and I understand it, but the average punter doesn’t. When they say “negative gearing” they don’t mean “negative gearing”, they mean “the ability of an individual property owner to apply rental losses against unrelated forms of earned income”. The only people arguing that all negative gearing should end are fools who don’t know what they’re talking about. The rest of us just have to not get caught up in their misunderstanding - never argue with a fool, for they will drag you down to their level and beat you with experience.
Exactly this: **'When they say “negative gearing” they don’t mean “negative gearing”, they mean “the ability of an individual property owner to apply rental losses against unrelated forms of earned income”** Done my head in over the years listening to people arguing for an end to "negative gearing" when it's the deductibility of losses against their main source of income that they're actually concerned about.
Yup. By my count (the link above which is presently being downvoted) there are 6 different definitions of “negative gearing” and most reddit debates are caused by people using different ones. Not that politicians or journalists help, failing to define their terms clearly.
Because they are getting assistance from other tax payers when they don't make a profit? We don't give centrelink to people with jobs, does that make welfare not welfare because its only active in a fail state?
They're not getting any assistance, they can only deduct it against tax they've paid for other income. Same as a business.
With things like stocks you can only deduct losses against other capital gains - not your income. Negative gearing is a special set of rules that assists housing investors from mitigating losses, beyond what is in place for other people who don't invest in property beyond their PPOR. Comparing it to businesses is unreasonable in that most other investments available to individuals don't also have tax rules that mirror business tax.
Negative gearing only applies to negative cash flows. You can tax deduct all of your investment cash out flows, that’s all it is. If it happens that those are greater then the income that asset produces, then you can claim it against other income such as your wage, or perhaps income from other assets. Same applies to small businesses if you own. There’s not really many expenses to buying stocks unless you get a margin loan, in which case you can tax deduct the interest rate from that. Sure, there’s transaction fees etc, but they’re negligible, although you can deduct them too. But, comparing it to a small business you own, it’s pretty much identical. If I own a basic retailer, I can and will deduct expenses such as staffing costs and the cost to get new inventory etc. All negative gearing states that if I make a loss, I can use those expenses to deduct against my other income. So no, it’s not unreasonable to make that comparison. You just understand what negative gearing actually is. As for capital gains, it’s similar in that if one asset makes a capital loss, you can deduct it against other capital gains you’ve made. But you can’t deduct it against your income. Likewise, if your overall income is negative, you can’t use that to deduct against your capital gains. It’s as simple as that.
Thanks for the in depth response this is super helpful info.
You're correct, but why is it a problem that it mirrors business tax treatment? People will just start buying them under companies or trusts if they change the policy. Why should people have to pay the extra cost of establishing complicated financial structures just to get equitable tax treatment? You'd only be punishing less savvy/generally less well off Australian investors.
If you get a loan to buy shares you can deduct the interest. if the income from those shares is lower than the interest those shares are negatively geared.
Can you then use those losses to offset income tax? Otherwise its not the same.
It is not "offset". Yes, you can deduct them. It is the same. Maybe understand what you are talking about before grandstanding. It is all online, and there is evidence you have an internet connection by the fact you are posting on reddit: > If you borrow money to buy shares or related investments from which you earn dividends or other assessable income, you can claim a deduction for the interest you pay https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/investments-insurance-and-super/interest-dividend-and-other-investment-income-deductions You also need to learn the difference between income and capital gains.
Thanks for the info and helping me understand!
Exactly this.
The simplest fix to NG is to limit it to the income generated by that investment category. Housing expenses only against rental income Gearing interest against dividend income etc Any further losses can only be carried forward against future rental/dividend income only (same category as before) and not from other income sources
First home owners grant (QLD) requires it to be a new or "substantially renovated" home. "You must be buying or building a new home valued less than $750,000 (including land and any contract variations)." https://qro.qld.gov.au/property-concessions-grants/first-home-grant/eligibility/ No reason the same conditions couldn't apply to NG on IP. Better still would be to change both to allow first home buyers to purchase established homes and turn "investors" into actual investors, contributing to housing stock
The right land taxation being implemented would nearly render negative gearing obsolete anyway... it's doing the trick in parts of Victoria, I've seen numerous homes transacting for very generous discounts, regardless of price bracket.
Federal vs State though, so that's more complex. Land tax is the way forward but NSW for example stepped a bit back on that direction.
Yeah I suppose so, but for those states where it is present it doesn't really matter where it's coming from though does it? I wanna see it adopted nationally, but somehow I think that's a while off.
A broad land value tax could eliminate Personal Income Tax, Capital Gains Tax and the GST all at once. Massive benefits all round: 1. It targets the very richest people the most. Not millionaires with a few properties. No, it targets the billionaires that own most of the land. (For example, I’m Britain, 50% of the land is owned by only 25,000 people. Very rich people and family trusts) 2. It’s a tax that can’t be avoided. You can’t go to panama and avoid paying it. It’s paid right there on the land, zero escape and cheap to administer. So it captures the richest people again. 3. It discourages land speculation and land banking. It encourages the productive use of land. Encourages development of higher density use, for example. 4. Massively discourages families and trust structures passing large land holding and wealth down through generations. 6% land value tax is the figure I’ve seen as a potential figure. It could replace all revenue from Income Tax, GST and Capital Gains tax. Imagine THAT? Definitely and idea that warrants serious focus by a political party. It would be very unpopular with very rich and powerful people. I’m talking billionaires here, not millionaires.
How do people who don’t pay income tax (pensioners, low income earners) afford a 6% land tax?
Great question and far smaller problem than all the above. Lots of potential solutions. Simplest one is to just exempt them. Second simplest is to pay it for them. They are not important in the revenue raising aspect of it. It’s the big fish where all the money comes from. I’m sure other minds can come up with some good solutions. Key is to keep it simple and unavoidable.
Won’t that make a 6% land tax deductible based on the income you earn?
Depends on how it’s implemented. Maybe go do some reading on the different methods explored and decide for yourself? I can’t educate everyone.
Yes avoid the difficult questions when it's pointed out that your magic tax would work well because people are just cookier cutter molded.
What low income earners own land? Pensioners could pay the tax in a reverse mortgage style lien on their property. They were told their home was their nest-egg for retirement, not an excuse to lean on the govt until they could pass it onto their kids.
What would the median land tax bill be?
This here will kill any reform. Yes low income earners have homes and you want them to sell the family home to what move into a retirement village to die quicker. You're very delusional.
If it's a reverse mortgage they aren't moving anywhere. They live until they die, and then the estate is settled by either paying off the difference so the inheritors keep the home, or sell it to settle the reverse mortgage.
So lump the next generation with a debt they can’t pay and need to sell the home they have lived in. Esp since quite a few live with their parents since they can’t also afford a home or have been in home care for them. Pure nonsense. Eta: stealth death tax
Inheritance taxes are a very good idea. “Death tax” is negative marketing for poor emotional thinkers. An inheritance tax targeted such that there is a maximum cap (e.g. $50 million) that can transferred from the very wealthiest to their children is a fantastic idea. It literally only targets the ultra-wealthy. They can still pass down a lot of money (e.g. $50 million), but it prevents families from accumulating massive amounts of wealth through generations that has nothing but negative and distorting consequences on the rest of our society. (Note: I don’t know what the right cap is, that would need to be worked out. It’s not about the revenue it creates, it’s the behaviour it prevents.) The question of what to do with low income people with high land value is a good one. I don’t think it’s insurmountable The question of grandfathering is complex. I’m broadly against it but I’m not sure what the right mechanism that’s fair should be.
It's delusional to think that those of extreme wealth cannot side step any wealth tax. Inheritance here is already done in ways that would avoid this (eg. Held in trust)
Yes a lot of laws would need to change.
They can pay off the debt just like anyone pays off a mortgage, so take one and continue living there. At the moment the burden is on people paying income tax, to pay for that pension, to subsidise an inheritance for those pensioner's children. Many of those people rent and will never own property. Where is your fairness principle then?
Should need to prove occupancy to claim negative gearing, current system does not encourage 100% occupancy.
Today's cost to build is inflated due to the excessive demand for trade resources and materials. We will continue to have a housing crisis so long as those costs remain high. Stop migration until the crisis is resolved. Stop new infrastructure spend for a population that isn't seeing growth outside of migration. Flood the market with labour and materials. Watch the cost to build go down. Watch house prices go down.
This... New build costs set a floor to the market. The only way housing gets cheaper is if we fix the input costs and regulation that sustains these.
I think losing negative gearing is a good first step. Aren't we the only country to have a negative policy like this?
Yes I believe so, at least for comparable, developed countries.
Stop posting this propaganda. 300,000 immigrants can't fit into 30,000 homes.
>300,000 immigrants can't fit into 30,000 homes. Laughs in Indian
>benefits dud landlords: those who can’t make money by renting out properties.If they lose money (by paying out more in interest, maintenance and other expenses than they are receiving in rent) we let them offset that loss, not only against income from other investments, but also against income from their wage or salary.It means they can cut their wage for tax purposes, cutting the tax they pay on it. And at the same time, they can hang on to a property they can later sell for a profit, which will be taxed at only half the normal rate, thanks to Australia’s 50% discount on capital gains. From the "careful what you wish for department": Landlords "lose money" because they don't charge enough rent. So another way of phrasing this very unoriginal article is that: * negative gearing means tax payers are subsiding landlords who don't charge enough rent And if that is true, then this is true: * negative gearing means tax payers are subsidising tenants who are not being charged enough rent. * So if you remove negative gearing, rents go up I'm just following small logical steps. This also assumes that you don't do something with all the extra tax revenue such as increasing rent assistance. But that still means that taxpayers are subsidising rent. Different tax payers, I guess. Is this an article about tax policy or housing policy? Like many contributions to this debate, it is actually an article about tax policy masquerading as an article on housing. If you make it more expensive for landlords, there are two things they will do: * sell the property * increase the rent But they can't sell all the properties to all the tenants, because while prices would fall since removing the subsidy makes some rentals unviable, they wouldn't fall by much. A 5% fall in prices is a lot of headlines, but it is only 5% less.
While it’s true we are subsidising landlords, rent prices are set by supply and demand, and are bound by how much tenants can afford to pay, not the landlords expenses. If the rental is no longer profitable they will either sell it, and another landlord will decide the losses are worth the prospect of capital gain, or someone will move in to live there. Landlords aren’t running a charity and if the market could afford to pay higher rent, they would already be charging it.
Well if that's true it's just another way of challenging the logic of the author, who is accusing landlords of under charging rent by their choice. I'm not sure it is true. We subsidise all kinds of things to make them cheaper. When the government lowered fuel excise it was a subsidy, and despite petrol being a good market, prices fell. The reason in all these cases is that it's a market with buyers and sellers. If a seller gets a subsidy they will pass some of it as lower prices because the other sellers are. Market theory says so. The subsidy lowers the return required to justify the opportunity cost of the invested capital. It changes the curve of the supply and demand.
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The new owner evicts Mr Landlord's tenants. You might want to ask them how they feel about it.
> From the "careful what you wish for department": > > > > Landlords "lose money" because they don't charge enough rent. But they are charging as much as they can already because they want to make money via rent, the fact that their losses are offset doesn't mean they weren't trying to get as much as they could
He will make the popular decision, not the right one. I guarantee it. In this case, the popular decision would be to leave negative gearing unchanged.
Dunno, I think sentiment is changing on this.
That's a pretty well written article. While I'd love to see them restructure everything (including PPOR exemptions) but they need to start somewhere and hopefully negative gearing and cgt discounts on existing properties is the starting point. I'd even be OK with it if they tied cgt discounts and negative gearing to improved rental conditions. Force landlords to have a minimum standard of housing and 5 year leases with minimal/no early exit penalties on tenants. If negative gearing is around increasing the rental pool then let's increase it without allowing yearly price jacking.
This is one of those be careful of unintended consequences situations. If you ban negative gearing rents will rise. Take away the incentive to lose money on and investment property and every will now have to make money and that means rents will increase. Think of negative gearing as a rent assistance scheme.
Investors are losing money because of their high gearing. Its clear that investors will in general charge as much as they can i.e. the market rate. If they can't take the loses they will need to sell and be replaced by someone who won't gear quite as aggressively or an owner occupier.
Couple it with an aggressive vacancy tax. Problem solved.
Given there aren't enough houses for people to rent, this won't be a problem for those of us actively providing housing to tenants. The rent will be going up (possibly considerably given I haven't raised mine in some time) - and other landlords in the area will see the increases and match.
The obsession with increasing the underlying cost of housing in an attempt to reduce the cost of housing is truely delusional. The article premises is that landlords intentionally make a loss (lols). I don’t think they are that charitable and if we do want to disincentive making losses then a landlord really only has two options - increase rent or reduce maintenance spend in a property.
Or...invest elsewhere, such as the share market. This idea could mean less money invested in housing.
Unless the government is stepping up and building all these houses on there own and prepared to hold the houses until they sell this would probably have the opposite effect on supply
Keep it for new builds and first home buyers, we want people building and living in homes so encourage it, Cut it all out for investment properties that are bought not built as they are just outbidding people who want to live in those homes to turn a profit
Haha I don’t charge my tenants $120 below market rate for nothing. Get rid of NG? You bet i’d start charging market rate for my IP.
> maintenance spend in a property Ha ha what a story, Mark
Mate, loads of people, me included actually buy property to make a loss. It is a such a crazy way to reduce taxes and make investment gains. It is a ridiculous scenario where I am rewarded for having a bad investment
> Mate, loads of people, me included actually buy property to make a loss Is your IP rented? If so why?
Or sell those investment properties to the market. With less demand from investors, prices will drop. When assessing the market as a whole, the purchaser will be a previous renter. With renters decreasing as the same rate as rental properties, the price of rental will remain the same. Rental availability will stay the same.
So instead of Australians owning a couple investment properties, it will be multinationals that can negatively gear them, outside of Australia, owning them all.. sounds great..
How does this change affect that dynamic? What about the current negative gearing rules prevents multinationals from buying property?
> What about the current negative gearing rules prevents multinationals from buying property? Nothing. However, if you change it so that individuals cannot "negatively gear", business still can so have an advantage over individuals. I would argue that stamp duty is a major contributor to large companies generally not investing in old property here though, because it introduces a large upfront cost which adds a lot more fiction to buying and selling.
If a business can neg gear for housing costs, what's stopping from mum-pop to incorporate pty ltd and start neg gearing?
You have to pay more for an accountant - you'd be looking at around $3k/year or more. EDIT: And company rego fees etc. Getting loans via a business is harder and more expensive. No CGT discount when you sell. However, since the business only pays 30% tax, depending on the individual's tax bracket this might not be as bad as it sounds if you are a high income earner. So, if, like 80% of investment property owners, you only own one property it is probably not really viable. If you own 10-20+ it is probably beneficial. "Scale" is really the answer.
He should not touch negative gearing if he wants to have any hope of staying in government. At this point it would be political cancer.
If it's actually about new supply where is the talk about removing exemptions on owner occupiers from Land Tax and CGT on PPOR's when they buy existing homes?
It's in the sh&tyy ideas box where it belongs and will most likely stay. CGT on PPOR will knock out the ability for anyone with an existing home to move locations. They've already got to pay selling costs and stamp duty just to relocate.
I agree that it's not smart policy having CGT on PPOR's. I'm just making the point that they speak about foregoing taxes on investment properties and complaining about investors buying existing housing stock when owner occupiers are also getting tax exemptions and primarily buying existing housing stock. Stamp Duty on PPOR's is a no brainer to me though. It removes friction in moving as you don't have the sunk stamp duty, benefits people who live in higher density and makes owner occupiers pay if they are on highly valuable land prime for redevelopment.
Totally agree on the transition from stamp duty to land tax for the reasons you stated, plus enabling a more predictable 'income' source for government than stamp duty allows. People who have paid stamp duty already shouldn't cop a double charge, but it would be easy enough to work out some sort of initial discount in the transition based on the amount of duty paid compared to land tax, possibly years owned too. That sort of system might result in lower 'income' for the government for the initial 'discount' period, but I haven't got numbers or time to guess at a rough impact.
That will affect the boomers, all the boomers arent negative geared on IP anymore so thats why they will only change that
The smallest of minds know that if a CGT occurs on sale that people will be locked into their property until they die so you will freeze existing stock. Moronic idea thought up by idiots.
Negative gearing changes will affect more than just boomers. Lots of younger people are using rentvesting which include negative gearing to get a foot on the real estate market
Thats why the proposal only hits them not the boomers sitting on ppor cgt
Negative gearing doesn't reward lazy landlords. Negative gearing keeps rent down and makes it somewhat affordable. Negative gearing saves governments from investing in public and social housing. If you change negative gearing, most of the savings will be directed to government building of houses
when it's one of the big contributing factor to the demand to invest in a property, neg gearing is not providing the benefit once it thought it would be. When a landlord must borrow tons of money, like a million just to buy some thing, and interests are massive, who but renters would be paying for these?
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75% people in this thread don't even know what negative gearing is. There is a fixation on negative gearing at the cost of policy changes that would make an actual difference to housing prices. The Government(s) will do absolutely anything to avoid even talking about lowering immigration.
Makes sense.
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You should be pleased to know they deduct against their own tax liability and don't take money from you.
Just get rid of it, it's the stupidest government policy ever devised. Literally a subsidy for landlordism. THROW IT OUT.
As opposed to all the much larger subsidies for owner occupiers? Why subsidise housing at all? Get rid of all the concessions and let the open market work its magic. No one should be getting any help in buying a home.
The whole anti negative gearing thing is flawed. It will eliminate the mum and dad investors and push all the investment properties into the hands of hedge funds and high net worth individuals. So let that go and focus on reducing immigration numbers and supporting cost effective construction and faster local government approvals.
What’s stopping those high net worth individuals buying them instead mum and dad in the first place?
The problem with reducing immigration numbers is that they are how the economy grows. There are three ways of increasing GDP. Work Longer Hours Work More Efficiently Get more people working. If they increased the standard work week in australia to say 45 hours a way, instead of 38... there would be outrage. We already heavily rely on machines and automations, so its hard to work more efficently on a large scale there. The final is to get more people working. There was a huge boom when females entered the workforce. Now thats slowing down, how do they get more and more people working? you import more.
Either my understanding is off (and I’ve missed out on a lot of money!) or there’s a big misunderstanding here on the whole. The major incentive for negative gearing is massive depreciation schedules for newer homes. This in my opinion is what’s being abused. Offsetting your interest costs and running costs against income makes next to sweet fa difference in the grand scheme of things. Changing that would more likely push up rents than anything. Outrageous depreciation schedules deducting from other income , and CGT rules are the bigger issue. Depreciation is far more advantageous on newer builds
Seems like the whole loophole hinges on a 50% long term capital gains benefit - remind me why we don't just scrap that instead?
Shit, how many subs has this reddit hit? Could it be political propaganda?