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Our economy needs negative gearing, says franchise head

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Australian Broker | 17 Jul 2015, 07:15 AM Agree 0
A major franchise head says negative gearing plays an important role in sustaining the Australian economy, after the RBA urged the government to question the future of the controversial tax break
  • Neil Williams | 17 Jul 2015, 10:24 AM Agree 0
    Negative gearing a benefit to only the wealthy? How many people do we all know - friends, family, associates - who could easily afford an investment property or two, but do not acquire one for fear of making a bad investment. Seems the "brave" among us who seek to become financially independent could be the most heavily penalised.
  • BJ | 20 Jul 2015, 12:03 PM Agree 0
    Naughty, naughty RBA for suggesting any review on negative gearing, but thankfully the Cop on the beat, Mortgage Choice, is all over things "We Think".
  • richard butler | 01 Aug 2015, 04:02 PM Agree 0
    I rember when they removed negative gearing and the whole country felt it hope you enjoy this read into what happened i belive john favil is correct in his statement and belive history can repeat it self if you want to kill the real estate market in Australia open pandoras box by removeing Negative gearing,

    By Gavin Putland, cross-posted from the Land Values Research Group:

    The McKell Institute’s report on negative gearing (Richard Holden, Switching Gears, June 2015) concluded that negative gearing for future investors should be allowed only for new homes. I have been pushing that idea since 2003. But the McKell report, in its account of the Hawke-Keating government’s brief quarantining of negative gearing (based on contemporary reports in the Sydney Morning Herald and the Sun-Herald), reveals that the idea dates back at least as far as 1987. I quote from pp.21–22:

    Treasurer Paul Keating insisted at the time that the overwhelming factor deterring potential investors was high interest rates, needed to counter high inflation. By December 1986, the interest rate on loans to building societies had reached 15.5%, with NSW particularly hard hit, as new dwelling commencements decline [sic] by some 28% on the previous year.

    By February 1987, the Real Estate Institute (REI) of NSW joined the HIA in blaming [disallowance of] negative gearing for contributing to a “rental crisis” in Sydney. …

    In March, the Master Builders Federation of Australia released figures showing that Sydney rental prices had skyrocketed by 25% in the previous 12 months. …

    By April, BIS Shrapnel released data showing that the level of new dwelling constructions had plummeted to a 10 year low….

    By June 1987, the Liberal Party announced that if elected, it would replace Labor’s prohibition of negative gearing on rental properties with a system allowing deductions from taxable income on interest incurred on borrowings up to 80 per cent of the value of the rental property.

    This received immediate support from the Confederation of Australian Industry (CAI) and the NSW REI, but was sternly criticized by the Tenants Union (TU) of NSW.

    TU spokesman Tracy Goulding… argued that “These taxes aren’t directly responsible for the housing crisis. The rental crisis is an ongoing thing…”

    Nevertheless, the Coalition began to ramp up its attacks on negative gearing as contributing to higher rental prices and longer public housing waiting lists. …

    In August, the NSW REI released new figures which showed that Sydney rental prices had increased by 66% in the previous 12 months…
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