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Removal of negative gearing 'short-sighted', says spokesgroup

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Australian Broker | 23 Oct 2013, 05:00 AM Agree 0
A report on the government's housing policy released this week has been met with a strong counterargument from the real estate industry
  • not so old broker | 23 Oct 2013, 09:22 AM Agree 0
    I seem to remember when Keating removed negative gearing the rental market went into a tailspin, causing social disruption and hardship. Perhaps an unintended consequence, but certainly one that must be taken into account. The Grattan Institute seem to sit on their offices and pontificate - you need to look widely. It isn't theory, it is people's lives and planning for the future.
  • Broker Tony | 23 Oct 2013, 09:55 AM Agree 0
    It is about time there was a fundamental recognition that negative gearing is not a product that someone can invest in to reduce their tax. It is a genuine situation where an investor has made insufficient income to cover their costs and consequently incurred a loss. It is no different to running a business and over time the rent should increase and the property will eventually make a profit on which tax will be paid. If the earlier losses are due to depreciation claims then the eventual capital gain will be higher and tax will be paid then. At best negative gearing is a deferral of tax, a recognition of the realities of investment in geared assets and minor compensation for genuine losses incurred to assist put a roof over a tenants head. If you are negatively geared by $10k pa your tax refund on that will for most people be $3k-$4k at best ie you are genuinely losing $6k-$7k which will never be recovered except by capital gains which are also taxed. This is not a rort - it is a public service and should be recognised as such.
  • Rosemary Johnston (PIAA) | 23 Oct 2013, 10:36 AM Agree 0
    The Grattan Report raised some interesting issues. Negative gearing has almost become a de facto Government policy to provide rental accommodation for Australian's. NRAS has taken this into affordable and social housing as well.

    Without negative gearing the Government would need to find millions of dollars to invest in housing to meet the shortfall and it simply does not have these funds.

    Concurrently they need to create more self funded retirees as the number of tax payers decreases with retirement of the baby boomers. To create a significant impact on housing prices due to a flood of sales of unsustainable investment properties at this time would be difficult to imagine. Negative gearing will raise its head from time to time however post GFC it is difficult to imagine it being an affordable policy for an Australian Government.
  • Incognito | 23 Oct 2013, 09:04 PM Agree 0
    Refreshing views from the Grattan.

    The REIA have a huge interest in maintaining - or raising - property prices further so their views must be treated as such, or probably disregarded.
  • AP | 23 Feb 2016, 12:18 AM Agree 0
    I have two investment properties both are negatively geared. I f negative gearing is removed I am going to increase rent atleast by $100 to $120 a week or sell property. Negative gearing needs to stay otherwise it will have impact on renters.
    • Broker | 23 Feb 2016, 01:56 PM Agree 0
      Proposed legislation says that the new policy will be grandfathered ie it will not affect your existing arrangements.
      How does that change your strategy towards rental vs sale vs hold?
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