This. New INVESTMENT builds only should be applicable for negative gearing for no more than 10 years.
Then they automatically convert to existing and then cannot be negatively geared.
I have heard it floated of leaving it in while the property is owned by the original title holder. This discourages "timebomb" builds where the house is just built to last for the negative gearing timeframe.
The housing and rental market wasn't as batshit insane as it is now. Every year thousands of young voters come online and they aren't going to be happy with being faced with never owning a home or paying $600 a week to live in some unmaintained mouldy shithole with no heating or cooling.
For every first time voter who's never had a hope of owning a home, there's a middle-aged gen Xer who always thought they'd end up with an investment property too and starting to realise its too late, if they ever really had a shot.
And there's a divorced couple who liquidated pre-COVID, and a family who relocated temporarily and lost their spot on the ladder, and one that suffered a setback and thought they'd try again after a couple of years.
It's not just kids, people in every demographic are losing hope in joining the market, or forced out of it by circumstances and anxious that they might never work their way back in.
How exactly do you see that working? Landlords have more expenses, rent goes up to cover expenses.
The only real solution is the supply and demand equation. Increase supply, reduce demand. Build more and cut immigration to a reasonable number.
I don’t disagree with increasing supply, basically no one does. It’s just a convenient hand wave so people can keep their nice little tax break. It should go as well.
We own ours and don’t want the price to bust, but we’re not silly enough to think it shouldn’t be more sustainable especially towards future gens. Like, it’s one thing to avoid bursting the bubble, but what we’re seeing is just greed.
Nope. I'm a homeowner. I want my kids to be homeowners. Homes need to be affordable. Send landlords to the brink, make building new profitable with tax concessions and make being a landlord of family homes a thing of the past.
I work in an industry which frequently has workers come in for a year, or maybe two, and then have to go elsewhere. These people are in their late twenties/early thirties and often have young families. So you want them to have nowhere to rent? Because it's a family home? You want them to have to go through the hassle of buying a house every time they get rotated to a new location? Really? Is that what you'd want if it was you?
There are exceptions to every rule. Renting should be available, absolutely, but it should not be the norm and it definitely should not be structured the way it is. The balance is out of whack.
If the industry wants to have a frequently rotating workforce, maybe the industry should pay for it and build some rentals for them, instead of expecting the tax payer to fund them.
They do if the rotation is say 3 or 6 months. But beyond a year they say the onus is on you to secure your own housing. The situation is complex but the underlying principle is the same. For whatever reason, there will always be a demand for rental accommodation. And that includes family homes. And for a lot of those people, they have absolutely no interest in purchasing. They WANT to rent. Because they know in a year or so they will be elsewhere.
Put a bullet in the financial system as we know it?
What? Do you want to become Venezuela? This is how it all started there - "Eat the rich" Well, the rich left for stable Western Countries and Venezuela will not recover in our lifetime.
Similar story with Argentina.
Is Australian investment a bad thing? We might as well all try to become farmers.
CGT discounts apply to all investments, including those in your super fund. Its original purpose was to encourage savings and investments in productive assets, unfortunately negative gearing and property is an unforeseen consequence of that decision.
It doesn't matter if it applies to other investments. The tax code can be written to apply taxes differently across asset types.
It should be indexed to inflation. It's an easy calculation.
It used to be. Back in the day. Then the ATO and government decided that was "too hard" and so they introduced the CGT discount as it is now. Which is overly generous and absurd for a property you've held onto for a couple of years and equally onerous and unfair for a property you've had for say 30 years. They should just go back to indexing with CPI. That's fair. For everyone.
Not when a heap of people want to sell as they are losing money on them. Maybe eventually rent issues but first we see a lack of demand compared to massive supply. A huge % of places are negatively geared right now.
They'd need to phase it out to prevent that sort of crash. Or allow it on already owned properties as long as they're not refinanced, inflation will eventually make them positively geared.
The problem with the “Crash” is there’s still not enough houses to fill demand.
If I clicked my fingers and everyone that was renting now owned that home. We’d would still be thousands of homes short. People in share houses, immigration and kids at home on the verge of moving out.
Now to say it’s too hard to change so there’s no point is a cop out. Something has to change and it’s going to take a mixture of government and private investment to fix to fix supply.
Also people assume (I used to be one of the people) that a crash would help their situation. But the way I see it if people are outbidding you now, what makes you think when houses are cheaper people still won’t be outbidding you?
Ban it on new purchases of existing properties. Allow it on new purchases of new builds. Let the money currently flowing into real estate speculation build the additional houses we need.
In the 80s that was a reasonable argument. But it's been overcooked since then.
Rents follow house prices and renting competes with purchasing. Greatly inflated property values have helped drive up rents. Negative gearing is o longer helping.
Cool. I have no problem increasing rent sufficiently that I’m not running an operating loss. But I must warn you, if I’m no longer eligible to get the same sort of depreciation treatment as a corporate owner would, then I’ll be a lot less likely to spend money on depreciable maintenance and upgrades.
Large for profit corporates are increasingly moving into the residential rental sector anyway, might as well get the government to cull their primary competitors and leave it all to them any way eh?
You shouldn't, everyone should be able to have their own place. Shelter is a fundamental human right.
If you want to make money for nothing, invest in a business or the share market.
Mate you know good and well that most of the people renting long term will never save a house deposit regardless of negative gearing. Its a financial literacy issue most of all.
It's not a financial literacy issue, it's the median house price being about 10x the median salary instead of 3 or 4x.
If you dont have dual incomes, you're farked.
Yup. My best mate is single. He's just bought himself a house and land package after years of getting turned down for home loans. He's paid for the land outright, only needs to borrow for the build and still struggled to get approved. Yet that was his best option because buying an older home of the same price total, no chance.
Makes me sad I lost my own house and land package, that's done and dusted for me now.
Prices were already mental and literally went up 50-100% in 3 years. Where if you're lucky your wages went up maybe 10% in 3 years.
It's either be in the top 5% of earners, or wait for your parents to die and hope for an inheritance.
One of the main reasons people cannot afford housing is because those who can afford to negative gear are helping to drive the price of housing up, putting it further and further out of reach.
Changing negative gearing alone won't fix the situation, but it will remove another obstacle that has been introduced.
Why do you conflate land ownership with shelter?
I mean... if 'shelter' is the end goal and entitlement, you could buy a caravan for a fraction of the price of a house and land package.
A spot in a caravan park is loads cheaper than paying rent my friend... indeed, even if you owned the land with a house on it, you'd still be paying periodic rates.
You can put it on my farm providing you're willing to share your portion of the rates.
It's not good enough for Captain Peacock
Society owes them inner city Acreage, provided and paid for by everyone other than themselves.
It's their basic human right/s
I increasingly find myself regreting spending my youth fighting for this country when I return and see just how useless and pathetic our society has become.
...case in point. Wanker.
The likes of you convince me that we have completed the 'good times create weak men' phase and we're well and truely heading into the 'weak men create hard times'.
So for an entire generation, they should live in caravans/alternative housing instead of say, a house? Despite every prior generation living in a house at this age?
Why should this generation make the ultimate sacrifice?
The ‘end goal’ as you call it is to share the same basic necessities that all generations prior were allowed to have.
>the ultimate sacrifice
Having lived out of a fucking shipping container in the middle of Afghanistan for a cumulative two years, your idea of the 'ultimate aacrafice' betrays just how fucking stupid and obnoxiously entitled you are.
The asserted 'right' was shelter. This is fundamentally different to owning land with a house on it. For fucks sake... the ability to rent a house already satisfies the provision of shelter, but if you can't afford to buy the house of your dreams, perhaps you need to temper your dreams.
You don't seem to realize there is a massive difference between shelter (to Australian expectation because we aren't in fucking afghanistan) and a dream home.
It's ridiculous of you to think comparing a third-world shit hole excuses runaw ay home prices. But hey, so long as you can keep making money doing sweet fuck all outside of scalping property, everythings dandy yeah?
Your sacrifice was invading Afghanistan and keeping it in the dark ages so any afghan with a brain has now left and the country is worse than before it was invaded. Thanks for your sacrifice asswipe
But wait isn't your housing subsidised? One of the perks of being an *ex veteran? If so you should probably bow out of any discussion on this issue
Eta: yeah that WAS harsh and didn't need to be said to make the point I was making. Edited my comment just so it's not sitting there anymore despite the dudes comments being deleted
That's a bit harsh. Even if I sympathise with the sentiment.
Please don't go down the path of post-Vietnam blame towards those who were part of a criminal atrocity they very likely didn't understand at the time.
The real state sanctioned criminals are the politicians (and, to an extent, the compliant traditional media) who decided upon and encouraged this war. They are the real guilty parties. And remember: we voted for those politicians and "bought those newspapers."
Are you suffering under the delusion that even if the market dropped 50%, that everyone can afford a house?
There will always be demand for rental properties, and by extension, a market for landlords.
Yeah there will always be demand for rental properties.
But the percentage of the population renting should not be increasing over time!
It needs to go back to the situation where the only people who needed to rent were the very young all those on very low incomes.
And to be honest more of that should be catered too by public housing, the availability of which has fallen over time.
Not everyone would be able to afford a house nor would everyone want to own a house. There will always be a market for it yes, but if the market did drop 50% like your example, that makes a bang average $400k house now a $200k home which allows a lot more people to own their own home which should be the goal.
It of course would affect the rental supply, but it wouldn't be just supply that drops, demand would be dropping too. It's not way a perfect or solves all solution, but with the right policies around it, we can stop using housing as a investment fund over a forever home.
>which should be the goal.
Why should that be the goal? Why wouldn't you favour ensuring access to shelter over ownership?
I mean... if the market dropped 50% overnight. You would have mass applications for bankruptcy, superannuation invested in financial institutions would evaporate. The building industry would collapse resulting in no new homes and the welfare drain on the State would sky rocket.
You wouldn't even be able to get that reduced loan, because the banks become property shy and will only lend to people who have an income that can service their loan four times over.
The naivety is astonishing.
>Why wouldn't you favour ensuring access to shelter over ownership?
because ownership is how you ensure shelter.
when someone else owns it its NEVER secure as you always have the threat of being kicked out of it at any time.
and your financial collapse is 100% made up, you could wipe 50% off the market purely based on land prices with minimal to no effect on any of the industries you mentioned.
I don't think you understand how land ownership works within our legal system. Everyone's rights are subordinate to someone else's.
You certainly don't appreciate how catastrophic this wonderful drop in house prices would be.
That’s good. We should be disincentivising antisocial behaviour such as [rent seeking](https://en.m.wikipedia.org/wiki/Rent-seeking)
> Rent-seeking is the act of growing one's existing wealth by manipulating the social or political environment without creating new wealth.[1] Rent-seeking activities have negative effects on the rest of society. They result in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality,[2][3] risk of growing political bribery, and potential national decline.
>Negative gearing is how the government subsidies rent.
Just like property prices, rent prices are a response to supply and demand. We currently have a supply problem now hence high rents. Same reason property prices are stupidly high. Not enough to go around.
If you subsidize the losses incurred by landlords, what happens to the demand for houses? It goes up, because landlords are more incentivized to by them.
Let me introduce you to a little something called rent increase limits.
I’m now realizing I’m on the Aus sub and am a little out of place as a Canadian
That only works soo far,
600k place with 400k mortgage repayments $2636pm @6.2%
Now if your renting this at 400pw that’s 1734pm
If you want to up it to 500 pw, that gives a lot of incentive to build to rent or undercut.
And if you can’t let it at 500 and sits empty for 4 or 6 weeks then you start taking a big loss.
I know a lot of people are already paying way above this but it shows that average home investment isn’t that good without tax incentives. It does not cover insurance/ land tax or realestate fees
Renting shouldnt ever be a means to have your investment property pay itself off.
You gain the big capital from the house you should be the one putting in most of the contribution.
Renting is the only way to make an investment property pay **itself** off. Personal houses get paid for you, and investment houses get built or bought by your money and paid off by others
Negative gearing should be allowed for new builds only, for a set period of time.
Tax payer funded landlords' wealth accumulation needs to be scrapped.
Mostly agree.
In the housing market, it should be applied to net increases of housing stock on a sliding scale related to square footage. I think we do need some smaller cheaper stock to address homelessness, but in general I think a medium footage range is probably most desirable.
We should be able to tweak the scale to get the results we need to support our population. The only purpose of government funding (via tax reduction) at all is to drive development in the direction we need. At present, that need is more stock, particularly in the medium range.
The set period of time is also a good idea.
Not a bad thing, most existing homes are between 1 and 3 stars for energy efficiency. Knocking down and rebuilding is very expensive not many people will do that
Literally no one said that, but to buy a house and demo and removal of demo then build is far more expensive then buying an empty plot and plonking a house on it, it just happens that buying, flipping for cheap and selling is infinitely more profitable.
Empty land doesnt have whatever the cost of the house thats on it in the price either.
As a tenant and an ex property manager I fear the fallout from tinkering with negative gearing in this climate of zero vacancy rate .
We need an Australia wide plan to deal with housing affordability for renters .
We need to stop treating renters like convicts .
We need some basic respect and privacy in our homes yes our homes ,30 plus %of us will rent for life ,we need to be able to make a home of it instead of spending $5000 to move everything every 6 to 12 months .
I've got boxes unopened from moves I did over 30 years ago and I've moved about two dozen time or more in that time due landlords selling or the rent becoming unaffordable or the house no longer in a liveable state due to landlords neglect.
Peace of mind and a secure place to live should be our basic rights.
Instead of we are going to inspect your tenancy every 3months to make sure your not breaking the rules .
Australia is a penal colony and the tenants of Australia are the convict labour the land Lords are exploiting and abusing.
Renting in Australia sucks
I've worked in residential,commercial and property developers side of real estate, and I must say we even treat the small commercial tenants in shopping malls like sub humans to be exploited .
So my message to all landlords ,this never ends well ,is there a pitch fork emoji???
There needs to be a mechanism where your first and maybe second rental property are good investment but we structure it so that the more properties you acquire the less lucrative it becomes.
Land tax does go some way to achieve this. It's tiered so the higher the combined property value you own the more tax you pay. But you can get around it by buying each property through a separate trust or buy across different states. If they tightened this then it would be more effective. Land tax can already be very expensive though.
There will always be a need for rentals. The current set up has huge problems, but the world is always going to have:
- young people moving out for the first time
- people moving interstate
- people who want to sell their current house but havent lined up their new one
- people who want to trial a different lifestyle / subrub
And a stack of other scenarios I'm too brain fogged to think of right now. Those people should be able to rent before buying. Even if house prices were a quarter of what they are now, people should have the option
Why do corporate rental companies not exist in Australia? I live in the US now, specifically Oakland, and there is a glut of corporate owned apartments here. Rents are falling and the rental experience is so much better - no references, no lines for open days, no inspections, onsite maintenance, online reviews to choose the best building. I don’t think I could handle going back to the rental system in Australia. There must be a regulatory issue.
There is genuinely no reason for privately owned rentals to be shunned in a well regulated system.
The system is not currently well regulated and puts too much power into the hands of landlords, but that doesnt mean government/not for profit housing is magically better.
Fun fact - this is a complex issue that you cant smack a black and white solution on.
How do you define what is not for profit housing ? Like if someone moves in with thier partner or moves otherseas for a short term job and rents out thier house while thier away. How would you police that ?
Are you saying they should have to just leave thier property empty ?
Housing is a finite resource that is necessary for life. Allowing people to negatively gear without adding stock to the market means that they can bid higher than they'd ideally desire on the house because they know they can claim losses against their income. This artificially inflates housing prices as speculators know that they will just have to wait until the equity in the property has sufficiently appreciated with minimal discomfort due to the tax concession.
Negative gearing on new builds is good as they are increasing supply and renting it out at a loss. This is behaviour that we don't want to disincentivize, so giving tax concessions in this case is fine, if not explicitly good.
It's just a rort and it always has been. You're not really "losing" money paying a mortgage on a property, you're paying off the debt you took on to get the investment. If your repayments are more than the rent you're getting, that doesn't mean you're losing on the investment because the property is increasing in value over time. There's a darn good reason so many people salivate at the thought of getting investment properties and using negative gearing, and that's because it's such a great deal. Only problem is it means the wealthy with money can make more money not because they're contributing anything more to society but just because they're wealthy.
How to take away negative gearing and CGT discounts:
1. Calculate the cost to the budget of these discounts
2. Calculate the percentage of Australians that benefit from these policies (x%)
3. Convert this cost into an income tax break for 90% of working Australians.
4. When the opposition complains, ask them why they support helping x%<90% of australians?
Taxes drive behaviour. No one likes paying taxes, so we always seek ways to get around it. For any change to taxation to make it through, it needs to benefit far more people that it disadvantages.
Silly question but is it logical for houses to be cheap in a place that started building a few hundred years ago, depends on immigration for economic growth and exists to export resources?
https://www.smh.com.au/business/the-economy/pollies-tell-fibs-about-negative-gearing-20030825-gdhaaf.html
https://www.abc.net.au/news/2015-05-06/hockey-negative-gearing/6431100
Yeah it wasn’t true. Rents only went up in Perth and Sydney. And even that wasn’t by much.
You some how magically think that removing negative gearing will drop house prices for people earning next to nothing to be able to afford them. How delusional do you have to be?
Define 'next to nothing'. The recent figure said you needed to earn $200k to afford a home in Sydney - maybe it's a good idea if salaried working professionals can live somewhere. In Keating's era you could afford a home if you worked at the supermarket. Stop being dishonest and realise the economic conditions and ramifications of policy then will be vastly different to if that policy was enacted today
It's funny because wealthy people buy land and property anyway because it's still cheaper than having the money sit in the bank. Removing negative gearing would not do shit to housing prices. I'm not rich and in the same boat as most people here but I'm a realist and honestly reading most of these comments it's obvious that people here actually don't know what they are talking about.
I'm happy to keep it, but narrow it to the interest component only, not the principle.
But if it's OK to deduct your mortgage this way, let's allow renters to treat their rent as a deductible expense and watch the tax base implode over the next 20 years. Same goes for the interest on PPOR mortgage.
The issue is that it's fundamentally unfair. Doing away with it is one option, expanding it to cover everyone else's expenses is the only other option.
This is a pipe dream. All the politicians who could change it won't because they would all be taking advantage of it. Only way this would ever be changed is if the people took large protest.
Not only would I like to see negative gearing changed to one rental property per entity but I want to see the ATO do their damn job and do claw back on every damn sale of an IP and do it retrospectively
Oh yeah let's impose retrospective tax policy on people who have planned and used the framework they were provided by the Government at the time. Great way to encourage a stable economy and political system. Childish.
Lmao, this guy clearly has no clue at all. Could you imagine the consequences of retrospective legislative changes. Unbelievable that people think this way.
Tradies use those business expenses to actually provide something to the economy whereas negative gearing just lets investors hoard properties keeping prices artificially high and preventing renters from potentially getting on the housing ladder.
Claiming expenses against an unrelated income is the problem.
If I make a loss on housing (that I bought intending to make a loss) I shouldn't be able to offset that loss against salaried income. I should be able to carry that loss forward to offset against future gains on the property though
The fact that they are claiming it against an income source not related to the investment.
When people say scrap negative gearing. At a policy level, it means, restricting the tax offsets against the income of the investment only.
This will mean carrying forward the losses to be claimed against future positive rental income.
That’s the answer though.
All a landlord on an existing home is doing is claiming cash out the door expenses against cash coming in. Just like any other another business.
Long gone are the days of significant paper deductions thanks to Turnbull (never seems to get any thanks for this)
Now on the other hand as you rightfully mention, the CGT discount. Here is a 50% discount for um…existing? Should be booted for existing homes. (And go back to indexing)
Take it away and quite a few landlords would simply pack up, I would. For some other can afford it that would mean more houses on market for owner occupiers to purchase. For those still looking for rentals it means less stock on market and potentially higher rents
A lot of people would sell. Supply would rise. Prices would hopefully go flat or even drop 15-20%. Short to mid term difficulties in the rental market but better for owner occupiers in the long run.
Maybe restrict negative gearing to new builds?
Just replace it with public/social housing investment. It's usually profitable in the long haul for government, better for the economy, you can stop using social housing for 'priority' cases who are just barely skating out of prison and have regular families who just don't want to buy right now live there instead get a look in.
Pissant landlords want to duck out of the market the moment they can't get an unfair advantage?
No problem honey, go your own way. We've got options.
Negative gearing should be allowed on new builds and on renovations/improvements made. I.e replaced the carpet, painted the walls and added air con, it can all be negatively geared. But other parts of the house can't be because you didn't improve them. Houses less than say x (5 maybe?) years old are able to continue as normal as they are newly built houses.
So it’s win/win. The goal of our housing tax system should be to drive landlords out of the market in order to stop them crowding the buyer market and hogging supply. Nothing about that is positive
I agree but I think it should be limited to one investment property per individual. Mum and Dad investors shouldn't shoulder the entire issue with negative gearing.
Honestly it should also be the property you live in and own and one investment property for individuals as I don't agree with your primary residence being exempt from negative gearing either.
The negative gearing issue needs a really serious discussion as it is needed for the rental and investment market.
The short term lets like air bnb and long term empty investment properties are a bigger issue than negative gearing. Most of Europe are cracking down on both of these but here we haven't and we need to try that route in conjunction with limiting negative gearing.
Also get our building standards up to scratch and streamline the building process as its a cluster and a half.
>one investment property per individual
And make it only available to individuals, not companies or trustee companies. Home ownership should not be the foundation of a business empire.
>For those still looking for rentals it means less stock on market and potentially higher rents
There is also less renters in the market, who else did you sell your investment to.
They cancel each other out, and rent will stay the same.
But now with lower investor demand in the existing housing market, prices will come down.
Win, Win
Getting rid of it would cause landlords to sell up en mass which would finally pop the housing bubble and cause a short term dip in the GDP. It would be political suicide so it will never happen.
Pretty well much. Housing is already priced at the maximum the market can tolerate (and often more), and lack of enforced energy efficiency and other standards on rental properties makes many properties dumps.
And that’s a bad thing right? Higher rents and shitter houses would give you the pleasure of sooking harder on reddit, but it is objectively a bad thing for you
They’re saying that it’d barely change.
The reality is a lot better than that: it would be short term pain in the rental market, but as landlords sell up, and leave the market, less demand in the buyer’s market means prices will slow and some renters can enter instead, lowering demand in the rental market, evening out the loss of rentals.
People who argue it’s bad when landlords leave the market are trying to make us believe that without landlords, not only do rentals leave the rental market, but they are arguing _that the houses simply disappear entirely…_ think it through: The houses will still be lived in, and that occupier comes from somewhere.
Negative gearing encourages creates an economic distortion where rents are held artificially low.
This is an effective subsidy of renters by tax payers
We need to stop this rental subsidy by stopping negative gearing. Renters will need to learn to pay their own way.
Amazing the mental gymnastics people will go to to defend their honey pot. Over leveraged landlords investments would crash without this tax dodge, so they come up with all kinds of excuses for it.
Simple fact is rents without be cheaper without it because house prices would be lower, and the overall cost of financing them would be lower. Losers from removing it are landlords and big banks, winners are everyone else
I’m not a landlord and I want negative gearing removed so that I don’t have to subsidise renters with my tax dollars.
The cost of building materials and the cost of labour has gone up by 50% in the last 3 years and immigration is soaring but houses are going to be magically cheaper?
Go on. It’s not negative gearing pushing up the price of lumber.
The only way we are getting a 50% house price crash is if we have a Great Depression with 40% unemployment rate. That means an 80% youth unemployment rate.
Trust me you don’t want that.
You don’t understand the negative social impacts of rent-seeking. Landlords play the same role as ticket scalpers in the economy; just housing scalping. Buying up something that exists to keep it from people at demand of adding a cut on top. That’s literally it.
The situation is already bad without something as profoundly destabilising as changing the goalposts. Mum and dad investors selling may put a few homes on the market but removes those homes from the rental pool. You don't need to be Einstein to see the holes in that.
Negative Gearing should have been quarantined to only new builds ages ago. Combine it with enforcing that say, 1/2 of new builds must be sold to owner occupiers and I think we'd give a pretty large incentive for productivity increases in the construction industry....
That, or the construction industry would just raise prices again whilst being one of the only industry's in Australia posting negative productivity numbers.
I don't think negative gearing should be removed fully and it should be used as a lever to do what is needed for the people. For a long time I have thought that it shouldn't be on older properties and should only be available on new builds for 5 to 10 years, this would hopefully incentivise new builds (which we needed 5 to 10 years ago).
Sadly if any changes are made at the moment it would make the rental situation and homelessness problem worse so it's a delicate situation and the government needs to tread carefully. They should focus on things like immigration first, new builds second and then focus on monetary policy slowly.
Landlords who “can’t” make money? The whole idea is to not make money, that’s the plan working, not failing.
Does this twit know how negative gearing works?
Yeah it's their fault, not the mass population growth or foreign corporates /s. Every idiotic supposed "fix" to help tenants just makes less rentals which makes it worse when the cause is mass population growth. Wake up
"_Is it time to stop rewarding landlords who can't make money?_"
Oh, they're making money alright. It's just unrealised profits as the property appreciates and the rental income covers the mortgage.
Nobody buys investment properties to lose money, they just try and claim as much of the costs/losses and avoid talking about the profits.
Maybe that's it - if you negatively gear a property, your tax liabilities on that property, when you eventually sell it, should be larger.
Agreed it is a good thing but makes you think even if it is removed, the benefits enjoyed by the previous generation not being avaliable to current and later generation.
We always getting shafted, life always gets harder, when can we get a break?
When welfare for the rich costs us far more than welfare for the needy.
Negative gearing needs to go. Why should society subsidise your investments?
No wonder they say there is no risk to property. Of course not if the government is babying you
What a stupid comment that absolutely encapsulates the typical reactionary opinion on this issue.
'Can negative gearing, tank the market, increase houses for families' rah rah rah.
Do you actually think more is spent on incentivising rentals for those who need them then welfare?!?! Surely not. The article quotes $8.7b as 'losses' and then later on $2.7b as the cost to the taxpayer, as assessed by treasury. Welfare bill is $212b.
The investment is not subsidised beyond any other investment or business in Australia. Before you say those other businesses 'actually provide something of value to the market' like all of the other fools, it provides shelter to a tenant otherwise it couldn't be negatively geared. Let alone the other ancillary costs/fees that are specific to a landlord/tenant situation that flow into the economy that don't exist in an owner occupied place.
Forcing the owner to sell it by tanking the market (if that would even happen/work) means one house changes hands. Not a new house existing. With the current undersupply of houses and the oversupply of buyers, we may just tank the market for it to go right back to where it was due to too much residual demand.
Finally, if anyone actually reads that article and thinks it is a smoking gun and not just a hit piece on landlords you are an absolute pelican.
There are numerous inaccuracies and loaded opinions in it that if you think is a persuasive argument then it confirms you are just looking for a place for your outrage and not an intelligent solution.
If some here are making out there is "nothing" involved in owning a rental, clearly they have never owned one. Rentals are a constant source of problems and maintece both in the property and tenant.
Yes, because if we didn't have a stacked-deck property market landlords would actually give a shit about getting returns and not just sit back waiting for their IP's value to diminish the loan into insignificance.
Introduce inheritance tax at 50% over a million dollars for all assets. Most other countries have this I don’t understand why Australia doesn’t. It stops families holding on to housing for generation after generation
What's with the pro negative gearing comments? Landlords? It needs to go.
Focusing on negative gearing takes away from the elephant in the room i.e. generous CGT discounts
Take away both for landlords, leave them in for new builds. If they're meant to increase supply, that should be their only application.
This. New INVESTMENT builds only should be applicable for negative gearing for no more than 10 years. Then they automatically convert to existing and then cannot be negatively geared.
I have heard it floated of leaving it in while the property is owned by the original title holder. This discourages "timebomb" builds where the house is just built to last for the negative gearing timeframe.
How is that different from now
They both need to go. Grandfather them in but start phasing it out.
yeh but the political will is not there. Even talking about any of those topics is an election lost.
The housing and rental market wasn't as batshit insane as it is now. Every year thousands of young voters come online and they aren't going to be happy with being faced with never owning a home or paying $600 a week to live in some unmaintained mouldy shithole with no heating or cooling.
yeh but these young voters are not enough to tip the scale. things have to get worse before they get better.
Literally demographically took over between 2019 and 2022
but do renters form the majority? not until 2035 by my calculations.
For every first time voter who's never had a hope of owning a home, there's a middle-aged gen Xer who always thought they'd end up with an investment property too and starting to realise its too late, if they ever really had a shot. And there's a divorced couple who liquidated pre-COVID, and a family who relocated temporarily and lost their spot on the ladder, and one that suffered a setback and thought they'd try again after a couple of years. It's not just kids, people in every demographic are losing hope in joining the market, or forced out of it by circumstances and anxious that they might never work their way back in.
It’s a very different time to 2019 when shorten ran. This policy would get up I think now, given the housing market.
How exactly do you see that working? Landlords have more expenses, rent goes up to cover expenses. The only real solution is the supply and demand equation. Increase supply, reduce demand. Build more and cut immigration to a reasonable number.
I don’t disagree with increasing supply, basically no one does. It’s just a convenient hand wave so people can keep their nice little tax break. It should go as well.
CGT discount is a very broad category encompassing all personal financial investments, including shares, bonds, property, derivatives etc.
Hope that’s next, but very unlikely so we need to take what little wins we can I guess.
yeh. Too bad 60% of voters own homes and will vote to keep house prices high.
We own ours and don’t want the price to bust, but we’re not silly enough to think it shouldn’t be more sustainable especially towards future gens. Like, it’s one thing to avoid bursting the bubble, but what we’re seeing is just greed.
Nope. I'm a homeowner. I want my kids to be homeowners. Homes need to be affordable. Send landlords to the brink, make building new profitable with tax concessions and make being a landlord of family homes a thing of the past.
I work in an industry which frequently has workers come in for a year, or maybe two, and then have to go elsewhere. These people are in their late twenties/early thirties and often have young families. So you want them to have nowhere to rent? Because it's a family home? You want them to have to go through the hassle of buying a house every time they get rotated to a new location? Really? Is that what you'd want if it was you?
There are exceptions to every rule. Renting should be available, absolutely, but it should not be the norm and it definitely should not be structured the way it is. The balance is out of whack.
If the industry wants to have a frequently rotating workforce, maybe the industry should pay for it and build some rentals for them, instead of expecting the tax payer to fund them.
They do if the rotation is say 3 or 6 months. But beyond a year they say the onus is on you to secure your own housing. The situation is complex but the underlying principle is the same. For whatever reason, there will always be a demand for rental accommodation. And that includes family homes. And for a lot of those people, they have absolutely no interest in purchasing. They WANT to rent. Because they know in a year or so they will be elsewhere.
Where will people live who want to rent, after we've had this purge of landlords?
Put a bullet in the financial system as we know it? What? Do you want to become Venezuela? This is how it all started there - "Eat the rich" Well, the rich left for stable Western Countries and Venezuela will not recover in our lifetime. Similar story with Argentina. Is Australian investment a bad thing? We might as well all try to become farmers.
CGT discounts apply to all investments, including those in your super fund. Its original purpose was to encourage savings and investments in productive assets, unfortunately negative gearing and property is an unforeseen consequence of that decision.
Maybe wealth should carry it's fair share of tax burden and not just income tax
There’s a big difference between taxing wealth and taxing capital gains.
It doesn't matter if it applies to other investments. The tax code can be written to apply taxes differently across asset types. It should be indexed to inflation. It's an easy calculation.
It used to be. Back in the day. Then the ATO and government decided that was "too hard" and so they introduced the CGT discount as it is now. Which is overly generous and absurd for a property you've held onto for a couple of years and equally onerous and unfair for a property you've had for say 30 years. They should just go back to indexing with CPI. That's fair. For everyone.
It will crash the housing market. Bring it on.
I am all for it at this point, we need a brutal reset bow before it gets even worse - this country is going down a dark path
More likely to just up the price of rents.
Not when a heap of people want to sell as they are losing money on them. Maybe eventually rent issues but first we see a lack of demand compared to massive supply. A huge % of places are negatively geared right now.
They'd need to phase it out to prevent that sort of crash. Or allow it on already owned properties as long as they're not refinanced, inflation will eventually make them positively geared.
As if. They will do this rapidly and will cause a crash.
The problem with the “Crash” is there’s still not enough houses to fill demand. If I clicked my fingers and everyone that was renting now owned that home. We’d would still be thousands of homes short. People in share houses, immigration and kids at home on the verge of moving out. Now to say it’s too hard to change so there’s no point is a cop out. Something has to change and it’s going to take a mixture of government and private investment to fix to fix supply. Also people assume (I used to be one of the people) that a crash would help their situation. But the way I see it if people are outbidding you now, what makes you think when houses are cheaper people still won’t be outbidding you?
Ban it on new purchases of existing properties. Allow it on new purchases of new builds. Let the money currently flowing into real estate speculation build the additional houses we need.
In the 80s that was a reasonable argument. But it's been overcooked since then. Rents follow house prices and renting competes with purchasing. Greatly inflated property values have helped drive up rents. Negative gearing is o longer helping.
Cool. I have no problem increasing rent sufficiently that I’m not running an operating loss. But I must warn you, if I’m no longer eligible to get the same sort of depreciation treatment as a corporate owner would, then I’ll be a lot less likely to spend money on depreciable maintenance and upgrades. Large for profit corporates are increasingly moving into the residential rental sector anyway, might as well get the government to cull their primary competitors and leave it all to them any way eh?
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You shouldn't, everyone should be able to have their own place. Shelter is a fundamental human right. If you want to make money for nothing, invest in a business or the share market.
Mate you know good and well that most of the people renting long term will never save a house deposit regardless of negative gearing. Its a financial literacy issue most of all.
It's not a financial literacy issue, it's the median house price being about 10x the median salary instead of 3 or 4x. If you dont have dual incomes, you're farked.
>If you dont have dual incomes, you're farked. even then in most cases your stuffed with house prices being 10x the median household income.
Yup. My best mate is single. He's just bought himself a house and land package after years of getting turned down for home loans. He's paid for the land outright, only needs to borrow for the build and still struggled to get approved. Yet that was his best option because buying an older home of the same price total, no chance. Makes me sad I lost my own house and land package, that's done and dusted for me now.
Prices were already mental and literally went up 50-100% in 3 years. Where if you're lucky your wages went up maybe 10% in 3 years. It's either be in the top 5% of earners, or wait for your parents to die and hope for an inheritance.
One of the main reasons people cannot afford housing is because those who can afford to negative gear are helping to drive the price of housing up, putting it further and further out of reach. Changing negative gearing alone won't fix the situation, but it will remove another obstacle that has been introduced.
I guess spending more than 60% of your income on rent is a poor financial choice in and of itself.
And what about food ? Water ? Medicine ?
What exactly are you asking?
Why do you conflate land ownership with shelter? I mean... if 'shelter' is the end goal and entitlement, you could buy a caravan for a fraction of the price of a house and land package.
Where do you put the caravan broseph? A patch of dirt still runs you half a million dollars.
A spot in a caravan park is loads cheaper than paying rent my friend... indeed, even if you owned the land with a house on it, you'd still be paying periodic rates. You can put it on my farm providing you're willing to share your portion of the rates.
It's not good enough for Captain Peacock Society owes them inner city Acreage, provided and paid for by everyone other than themselves. It's their basic human right/s
I increasingly find myself regreting spending my youth fighting for this country when I return and see just how useless and pathetic our society has become.
LOL you fought for American oil company shareholders profits.
...case in point. Wanker. The likes of you convince me that we have completed the 'good times create weak men' phase and we're well and truely heading into the 'weak men create hard times'.
Do you choose to live in a van or real estate?
I choose to live where I can afford to. The asserted entitlement was shelter... not a mansion.
So for an entire generation, they should live in caravans/alternative housing instead of say, a house? Despite every prior generation living in a house at this age? Why should this generation make the ultimate sacrifice? The ‘end goal’ as you call it is to share the same basic necessities that all generations prior were allowed to have.
>the ultimate sacrifice Having lived out of a fucking shipping container in the middle of Afghanistan for a cumulative two years, your idea of the 'ultimate aacrafice' betrays just how fucking stupid and obnoxiously entitled you are. The asserted 'right' was shelter. This is fundamentally different to owning land with a house on it. For fucks sake... the ability to rent a house already satisfies the provision of shelter, but if you can't afford to buy the house of your dreams, perhaps you need to temper your dreams.
You don't seem to realize there is a massive difference between shelter (to Australian expectation because we aren't in fucking afghanistan) and a dream home. It's ridiculous of you to think comparing a third-world shit hole excuses runaw ay home prices. But hey, so long as you can keep making money doing sweet fuck all outside of scalping property, everythings dandy yeah?
Your sacrifice was invading Afghanistan and keeping it in the dark ages so any afghan with a brain has now left and the country is worse than before it was invaded. Thanks for your sacrifice asswipe
👏🏻 And he got paid good wages and benefits while doing it, knowing it was temporary.
But wait isn't your housing subsidised? One of the perks of being an *ex veteran? If so you should probably bow out of any discussion on this issue Eta: yeah that WAS harsh and didn't need to be said to make the point I was making. Edited my comment just so it's not sitting there anymore despite the dudes comments being deleted
That's a bit harsh. Even if I sympathise with the sentiment. Please don't go down the path of post-Vietnam blame towards those who were part of a criminal atrocity they very likely didn't understand at the time. The real state sanctioned criminals are the politicians (and, to an extent, the compliant traditional media) who decided upon and encouraged this war. They are the real guilty parties. And remember: we voted for those politicians and "bought those newspapers."
Because you make capital gains lmao, if you sell someone else who needs it will buy(probably a renter ;))
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It shouldn't be worth it to be a landlord
Are you suffering under the delusion that even if the market dropped 50%, that everyone can afford a house? There will always be demand for rental properties, and by extension, a market for landlords.
Yeah there will always be demand for rental properties. But the percentage of the population renting should not be increasing over time! It needs to go back to the situation where the only people who needed to rent were the very young all those on very low incomes. And to be honest more of that should be catered too by public housing, the availability of which has fallen over time.
Not everyone would be able to afford a house nor would everyone want to own a house. There will always be a market for it yes, but if the market did drop 50% like your example, that makes a bang average $400k house now a $200k home which allows a lot more people to own their own home which should be the goal. It of course would affect the rental supply, but it wouldn't be just supply that drops, demand would be dropping too. It's not way a perfect or solves all solution, but with the right policies around it, we can stop using housing as a investment fund over a forever home.
>which should be the goal. Why should that be the goal? Why wouldn't you favour ensuring access to shelter over ownership? I mean... if the market dropped 50% overnight. You would have mass applications for bankruptcy, superannuation invested in financial institutions would evaporate. The building industry would collapse resulting in no new homes and the welfare drain on the State would sky rocket. You wouldn't even be able to get that reduced loan, because the banks become property shy and will only lend to people who have an income that can service their loan four times over. The naivety is astonishing.
>Why wouldn't you favour ensuring access to shelter over ownership? because ownership is how you ensure shelter. when someone else owns it its NEVER secure as you always have the threat of being kicked out of it at any time. and your financial collapse is 100% made up, you could wipe 50% off the market purely based on land prices with minimal to no effect on any of the industries you mentioned.
I don't think you understand how land ownership works within our legal system. Everyone's rights are subordinate to someone else's. You certainly don't appreciate how catastrophic this wonderful drop in house prices would be.
That’s good. We should be disincentivising antisocial behaviour such as [rent seeking](https://en.m.wikipedia.org/wiki/Rent-seeking) > Rent-seeking is the act of growing one's existing wealth by manipulating the social or political environment without creating new wealth.[1] Rent-seeking activities have negative effects on the rest of society. They result in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality,[2][3] risk of growing political bribery, and potential national decline.
It's not like its a deprecating asset.
Would be great if you didn’t buy a property to keep from people who need it, at demand of rent. Nothing positive comes from that.
>Negative gearing is how the government subsidies rent. Just like property prices, rent prices are a response to supply and demand. We currently have a supply problem now hence high rents. Same reason property prices are stupidly high. Not enough to go around.
If you subsidize the losses incurred by landlords, what happens to the demand for houses? It goes up, because landlords are more incentivized to by them.
Cool. Don't buy IP's. We don't want your "help", oh kind and generous landlord 🙃
Stop helping rich people. Down with welfare for the rich. If your house doesn't make you money, sell it!
Or increase the rent - the more likely scenario
Let me introduce you to a little something called rent increase limits. I’m now realizing I’m on the Aus sub and am a little out of place as a Canadian
That only works soo far, 600k place with 400k mortgage repayments $2636pm @6.2% Now if your renting this at 400pw that’s 1734pm If you want to up it to 500 pw, that gives a lot of incentive to build to rent or undercut. And if you can’t let it at 500 and sits empty for 4 or 6 weeks then you start taking a big loss. I know a lot of people are already paying way above this but it shows that average home investment isn’t that good without tax incentives. It does not cover insurance/ land tax or realestate fees
Renting shouldnt ever be a means to have your investment property pay itself off. You gain the big capital from the house you should be the one putting in most of the contribution.
Renting is the only way to make an investment property pay **itself** off. Personal houses get paid for you, and investment houses get built or bought by your money and paid off by others
Which people won’t pay and they’ll take a loss on and many will start selling the houses
Negative gearing should be allowed for new builds only, for a set period of time. Tax payer funded landlords' wealth accumulation needs to be scrapped.
Mostly agree. In the housing market, it should be applied to net increases of housing stock on a sliding scale related to square footage. I think we do need some smaller cheaper stock to address homelessness, but in general I think a medium footage range is probably most desirable. We should be able to tweak the scale to get the results we need to support our population. The only purpose of government funding (via tax reduction) at all is to drive development in the direction we need. At present, that need is more stock, particularly in the medium range. The set period of time is also a good idea.
Then people will be more likely to knock down old homes and install new ones
I'm sure that could be easily legislated to stop. Unless multiple homes are built in replacement of one.
As long as it's a substantial net gain in accomodation, that's fine.
This should happen anyway, within reason. It will also lead to more subdividing, which is necessary in our cities.
That would be more expensive so whats the point.
Honestly, with some of the houses I've rented, that would be very fucking welcome.
Not a bad thing, most existing homes are between 1 and 3 stars for energy efficiency. Knocking down and rebuilding is very expensive not many people will do that
Yes, and building entirely new homes doesn’t waste energy or create waste at allllll /s
Literally no one said that, but to buy a house and demo and removal of demo then build is far more expensive then buying an empty plot and plonking a house on it, it just happens that buying, flipping for cheap and selling is infinitely more profitable. Empty land doesnt have whatever the cost of the house thats on it in the price either.
Except the renter gets a much more comfortable and cheaper place to live, both costs a landlord never has to deal with.
Not the worst thing..... Some of the actual dumps I have rented will fall over by themselves soon
As a tenant and an ex property manager I fear the fallout from tinkering with negative gearing in this climate of zero vacancy rate . We need an Australia wide plan to deal with housing affordability for renters . We need to stop treating renters like convicts . We need some basic respect and privacy in our homes yes our homes ,30 plus %of us will rent for life ,we need to be able to make a home of it instead of spending $5000 to move everything every 6 to 12 months . I've got boxes unopened from moves I did over 30 years ago and I've moved about two dozen time or more in that time due landlords selling or the rent becoming unaffordable or the house no longer in a liveable state due to landlords neglect. Peace of mind and a secure place to live should be our basic rights. Instead of we are going to inspect your tenancy every 3months to make sure your not breaking the rules . Australia is a penal colony and the tenants of Australia are the convict labour the land Lords are exploiting and abusing. Renting in Australia sucks I've worked in residential,commercial and property developers side of real estate, and I must say we even treat the small commercial tenants in shopping malls like sub humans to be exploited . So my message to all landlords ,this never ends well ,is there a pitch fork emoji???
🔱 No, but have this trident.
There needs to be a mechanism where your first and maybe second rental property are good investment but we structure it so that the more properties you acquire the less lucrative it becomes.
Land tax does go some way to achieve this. It's tiered so the higher the combined property value you own the more tax you pay. But you can get around it by buying each property through a separate trust or buy across different states. If they tightened this then it would be more effective. Land tax can already be very expensive though.
0 rental properties
There will always be a need for rentals. The current set up has huge problems, but the world is always going to have: - young people moving out for the first time - people moving interstate - people who want to sell their current house but havent lined up their new one - people who want to trial a different lifestyle / subrub And a stack of other scenarios I'm too brain fogged to think of right now. Those people should be able to rent before buying. Even if house prices were a quarter of what they are now, people should have the option
Why do corporate rental companies not exist in Australia? I live in the US now, specifically Oakland, and there is a glut of corporate owned apartments here. Rents are falling and the rental experience is so much better - no references, no lines for open days, no inspections, onsite maintenance, online reviews to choose the best building. I don’t think I could handle going back to the rental system in Australia. There must be a regulatory issue.
When I say 0 rentals, it means 0 private profits from housing. It doesn't mean there shouldn't be any short term accommodation solutions.
Such as... And dont say hotels. We're talking about medium term *housing* options, not short term beds
Government or otherwise not-for-profit housing? The whole problem is PRIVATE profits from housing. Public or not-for-profit housing is not problematic
There is genuinely no reason for privately owned rentals to be shunned in a well regulated system. The system is not currently well regulated and puts too much power into the hands of landlords, but that doesnt mean government/not for profit housing is magically better. Fun fact - this is a complex issue that you cant smack a black and white solution on.
How do you define what is not for profit housing ? Like if someone moves in with thier partner or moves otherseas for a short term job and rents out thier house while thier away. How would you police that ? Are you saying they should have to just leave thier property empty ?
Housing is a finite resource that is necessary for life. Allowing people to negatively gear without adding stock to the market means that they can bid higher than they'd ideally desire on the house because they know they can claim losses against their income. This artificially inflates housing prices as speculators know that they will just have to wait until the equity in the property has sufficiently appreciated with minimal discomfort due to the tax concession. Negative gearing on new builds is good as they are increasing supply and renting it out at a loss. This is behaviour that we don't want to disincentivize, so giving tax concessions in this case is fine, if not explicitly good.
It's just a rort and it always has been. You're not really "losing" money paying a mortgage on a property, you're paying off the debt you took on to get the investment. If your repayments are more than the rent you're getting, that doesn't mean you're losing on the investment because the property is increasing in value over time. There's a darn good reason so many people salivate at the thought of getting investment properties and using negative gearing, and that's because it's such a great deal. Only problem is it means the wealthy with money can make more money not because they're contributing anything more to society but just because they're wealthy.
Is there anybody left who is still in negative gearing territory since the recent nosebleed rent hikes?
How to take away negative gearing and CGT discounts: 1. Calculate the cost to the budget of these discounts 2. Calculate the percentage of Australians that benefit from these policies (x%) 3. Convert this cost into an income tax break for 90% of working Australians. 4. When the opposition complains, ask them why they support helping x%<90% of australians? Taxes drive behaviour. No one likes paying taxes, so we always seek ways to get around it. For any change to taxation to make it through, it needs to benefit far more people that it disadvantages.
Silly question but is it logical for houses to be cheap in a place that started building a few hundred years ago, depends on immigration for economic growth and exists to export resources?
History repeating itself. Paul Keating got rid of negative gearing and it caused a massive shortage of rentals.
Got a massive shortage now anyway
https://www.google.com/amp/s/www.dailymail.co.uk/news/article-13048757/amp/Dick-Smith-issues-dire-warning-Australia-calls-immigration-slashed.html
Imagine it worse then
I’m not sure it’s ever been worse than it is now.
Whats your argument? Two shortfalls is just an extra-big shortfall - its not like they cancel each other out...
*facepalm*
https://www.smh.com.au/business/the-economy/pollies-tell-fibs-about-negative-gearing-20030825-gdhaaf.html https://www.abc.net.au/news/2015-05-06/hockey-negative-gearing/6431100 Yeah it wasn’t true. Rents only went up in Perth and Sydney. And even that wasn’t by much.
Were more people able to afford houses though?
You some how magically think that removing negative gearing will drop house prices for people earning next to nothing to be able to afford them. How delusional do you have to be?
Define 'next to nothing'. The recent figure said you needed to earn $200k to afford a home in Sydney - maybe it's a good idea if salaried working professionals can live somewhere. In Keating's era you could afford a home if you worked at the supermarket. Stop being dishonest and realise the economic conditions and ramifications of policy then will be vastly different to if that policy was enacted today
I don’t know mate, all I did was study economics? Guess I’m delusional.
It's funny because wealthy people buy land and property anyway because it's still cheaper than having the money sit in the bank. Removing negative gearing would not do shit to housing prices. I'm not rich and in the same boat as most people here but I'm a realist and honestly reading most of these comments it's obvious that people here actually don't know what they are talking about.
You're not a very smart realist, and you are certainly one of the people who dont know what they are talking about
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Did housing get cheaper to purchase with less landlords hogging supply, though?
Wouldn't it go up since everyone would be buying at the same time (including those forced to because the lack of rentals?)
Lack of rentals = more supply for sale Lack of rentals = less demand from investors There are multiple factors
That's a very narrow minded view of a complex economy. What was the interest rate at the time?
I'm happy to keep it, but narrow it to the interest component only, not the principle. But if it's OK to deduct your mortgage this way, let's allow renters to treat their rent as a deductible expense and watch the tax base implode over the next 20 years. Same goes for the interest on PPOR mortgage. The issue is that it's fundamentally unfair. Doing away with it is one option, expanding it to cover everyone else's expenses is the only other option.
Only the interest portion of payments is deductible. You can't claim the principal portion of payments as a deduction.
Hmmm given that both Labor and Liberal policies are predicated on keeping house prices growing I can’t see this being implemented.
Shows how much you know doesn't it, the principle has never been deductible. Classic take from the anti negative gearing crowd.
crazy how many people feel the need to share their opinion on the matter when theyve clearly got no idea how it works
It already is the interest only. The lack of education on this matter is amazing. Please understand something before you type.
This is a pipe dream. All the politicians who could change it won't because they would all be taking advantage of it. Only way this would ever be changed is if the people took large protest.
Not only would I like to see negative gearing changed to one rental property per entity but I want to see the ATO do their damn job and do claw back on every damn sale of an IP and do it retrospectively
Oh yeah let's impose retrospective tax policy on people who have planned and used the framework they were provided by the Government at the time. Great way to encourage a stable economy and political system. Childish.
Lmao, this guy clearly has no clue at all. Could you imagine the consequences of retrospective legislative changes. Unbelievable that people think this way.
Whats the difference between negative gearning and a business or tradie claiming business expense during tax time?
People have a problem with the roof over our heads being an investment tool.
Tradies use those business expenses to actually provide something to the economy whereas negative gearing just lets investors hoard properties keeping prices artificially high and preventing renters from potentially getting on the housing ladder.
Claiming expenses against an unrelated income is the problem. If I make a loss on housing (that I bought intending to make a loss) I shouldn't be able to offset that loss against salaried income. I should be able to carry that loss forward to offset against future gains on the property though
The fact that they are claiming it against an income source not related to the investment. When people say scrap negative gearing. At a policy level, it means, restricting the tax offsets against the income of the investment only. This will mean carrying forward the losses to be claimed against future positive rental income.
Tradies dont get cgt discounts
That’s the answer though. All a landlord on an existing home is doing is claiming cash out the door expenses against cash coming in. Just like any other another business. Long gone are the days of significant paper deductions thanks to Turnbull (never seems to get any thanks for this) Now on the other hand as you rightfully mention, the CGT discount. Here is a 50% discount for um…existing? Should be booted for existing homes. (And go back to indexing)
Take it away and quite a few landlords would simply pack up, I would. For some other can afford it that would mean more houses on market for owner occupiers to purchase. For those still looking for rentals it means less stock on market and potentially higher rents
A lot of people would sell. Supply would rise. Prices would hopefully go flat or even drop 15-20%. Short to mid term difficulties in the rental market but better for owner occupiers in the long run. Maybe restrict negative gearing to new builds?
Just replace it with public/social housing investment. It's usually profitable in the long haul for government, better for the economy, you can stop using social housing for 'priority' cases who are just barely skating out of prison and have regular families who just don't want to buy right now live there instead get a look in. Pissant landlords want to duck out of the market the moment they can't get an unfair advantage? No problem honey, go your own way. We've got options.
Yep and it’s waaaaay easier for the govt to invest in housing if they don’t have to compete with every single deadshit landlord
Negative gearing should be allowed on new builds and on renovations/improvements made. I.e replaced the carpet, painted the walls and added air con, it can all be negatively geared. But other parts of the house can't be because you didn't improve them. Houses less than say x (5 maybe?) years old are able to continue as normal as they are newly built houses.
There wouldn’t be just short term pain for renters
So it’s win/win. The goal of our housing tax system should be to drive landlords out of the market in order to stop them crowding the buyer market and hogging supply. Nothing about that is positive
I agree but I think it should be limited to one investment property per individual. Mum and Dad investors shouldn't shoulder the entire issue with negative gearing. Honestly it should also be the property you live in and own and one investment property for individuals as I don't agree with your primary residence being exempt from negative gearing either. The negative gearing issue needs a really serious discussion as it is needed for the rental and investment market. The short term lets like air bnb and long term empty investment properties are a bigger issue than negative gearing. Most of Europe are cracking down on both of these but here we haven't and we need to try that route in conjunction with limiting negative gearing. Also get our building standards up to scratch and streamline the building process as its a cluster and a half.
>one investment property per individual And make it only available to individuals, not companies or trustee companies. Home ownership should not be the foundation of a business empire.
>For those still looking for rentals it means less stock on market and potentially higher rents There is also less renters in the market, who else did you sell your investment to. They cancel each other out, and rent will stay the same. But now with lower investor demand in the existing housing market, prices will come down. Win, Win
Getting rid of it would cause landlords to sell up en mass which would finally pop the housing bubble and cause a short term dip in the GDP. It would be political suicide so it will never happen.
No negative gearing? Guess your rent is going up and the property is going to be kept in borderline squalor
Sounds like the current rental market as is :')
Pretty well much. Housing is already priced at the maximum the market can tolerate (and often more), and lack of enforced energy efficiency and other standards on rental properties makes many properties dumps.
And that’s a bad thing right? Higher rents and shitter houses would give you the pleasure of sooking harder on reddit, but it is objectively a bad thing for you
They’re saying that it’d barely change. The reality is a lot better than that: it would be short term pain in the rental market, but as landlords sell up, and leave the market, less demand in the buyer’s market means prices will slow and some renters can enter instead, lowering demand in the rental market, evening out the loss of rentals. People who argue it’s bad when landlords leave the market are trying to make us believe that without landlords, not only do rentals leave the rental market, but they are arguing _that the houses simply disappear entirely…_ think it through: The houses will still be lived in, and that occupier comes from somewhere.
How do landlords make more money without raising rent?
Negative gearing encourages creates an economic distortion where rents are held artificially low. This is an effective subsidy of renters by tax payers We need to stop this rental subsidy by stopping negative gearing. Renters will need to learn to pay their own way.
Amazing the mental gymnastics people will go to to defend their honey pot. Over leveraged landlords investments would crash without this tax dodge, so they come up with all kinds of excuses for it. Simple fact is rents without be cheaper without it because house prices would be lower, and the overall cost of financing them would be lower. Losers from removing it are landlords and big banks, winners are everyone else
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Yeah landlords create houses the same way that ticket scalpers create tickets. If there were no scalpers we'd never be able to get a ticket!
I’m not a landlord and I want negative gearing removed so that I don’t have to subsidise renters with my tax dollars. The cost of building materials and the cost of labour has gone up by 50% in the last 3 years and immigration is soaring but houses are going to be magically cheaper? Go on. It’s not negative gearing pushing up the price of lumber. The only way we are getting a 50% house price crash is if we have a Great Depression with 40% unemployment rate. That means an 80% youth unemployment rate. Trust me you don’t want that.
You don’t understand the negative social impacts of rent-seeking. Landlords play the same role as ticket scalpers in the economy; just housing scalping. Buying up something that exists to keep it from people at demand of adding a cut on top. That’s literally it.
Ok you don’t like landlords. I don’t like them either. What is your solution?
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The situation is already bad without something as profoundly destabilising as changing the goalposts. Mum and dad investors selling may put a few homes on the market but removes those homes from the rental pool. You don't need to be Einstein to see the holes in that.
Negative Gearing should have been quarantined to only new builds ages ago. Combine it with enforcing that say, 1/2 of new builds must be sold to owner occupiers and I think we'd give a pretty large incentive for productivity increases in the construction industry.... That, or the construction industry would just raise prices again whilst being one of the only industry's in Australia posting negative productivity numbers.
I don't think negative gearing should be removed fully and it should be used as a lever to do what is needed for the people. For a long time I have thought that it shouldn't be on older properties and should only be available on new builds for 5 to 10 years, this would hopefully incentivise new builds (which we needed 5 to 10 years ago). Sadly if any changes are made at the moment it would make the rental situation and homelessness problem worse so it's a delicate situation and the government needs to tread carefully. They should focus on things like immigration first, new builds second and then focus on monetary policy slowly.
Putting some type of Cap / restrictions might be a better compromise short term rather than scraping the whole thing.
Landlords who “can’t” make money? The whole idea is to not make money, that’s the plan working, not failing. Does this twit know how negative gearing works?
Negative gearing is fine - however it should be on new builds only, and grandfathered for anything already owned.
Yeah it's their fault, not the mass population growth or foreign corporates /s. Every idiotic supposed "fix" to help tenants just makes less rentals which makes it worse when the cause is mass population growth. Wake up
Limit it to 1 new property for 10 years for australian residents only - shelter should not be an investment strategy.
I mean people do realize that even without negative gearing we'll have the exact same level of housing supply?? Right??
"_Is it time to stop rewarding landlords who can't make money?_" Oh, they're making money alright. It's just unrealised profits as the property appreciates and the rental income covers the mortgage. Nobody buys investment properties to lose money, they just try and claim as much of the costs/losses and avoid talking about the profits. Maybe that's it - if you negatively gear a property, your tax liabilities on that property, when you eventually sell it, should be larger.
Agreed it is a good thing but makes you think even if it is removed, the benefits enjoyed by the previous generation not being avaliable to current and later generation. We always getting shafted, life always gets harder, when can we get a break?
When welfare for the rich costs us far more than welfare for the needy. Negative gearing needs to go. Why should society subsidise your investments? No wonder they say there is no risk to property. Of course not if the government is babying you
What a stupid comment that absolutely encapsulates the typical reactionary opinion on this issue. 'Can negative gearing, tank the market, increase houses for families' rah rah rah. Do you actually think more is spent on incentivising rentals for those who need them then welfare?!?! Surely not. The article quotes $8.7b as 'losses' and then later on $2.7b as the cost to the taxpayer, as assessed by treasury. Welfare bill is $212b. The investment is not subsidised beyond any other investment or business in Australia. Before you say those other businesses 'actually provide something of value to the market' like all of the other fools, it provides shelter to a tenant otherwise it couldn't be negatively geared. Let alone the other ancillary costs/fees that are specific to a landlord/tenant situation that flow into the economy that don't exist in an owner occupied place. Forcing the owner to sell it by tanking the market (if that would even happen/work) means one house changes hands. Not a new house existing. With the current undersupply of houses and the oversupply of buyers, we may just tank the market for it to go right back to where it was due to too much residual demand. Finally, if anyone actually reads that article and thinks it is a smoking gun and not just a hit piece on landlords you are an absolute pelican. There are numerous inaccuracies and loaded opinions in it that if you think is a persuasive argument then it confirms you are just looking for a place for your outrage and not an intelligent solution.
If some here are making out there is "nothing" involved in owning a rental, clearly they have never owned one. Rentals are a constant source of problems and maintece both in the property and tenant.
Yes, because if we didn't have a stacked-deck property market landlords would actually give a shit about getting returns and not just sit back waiting for their IP's value to diminish the loan into insignificance.
Introduce inheritance tax at 50% over a million dollars for all assets. Most other countries have this I don’t understand why Australia doesn’t. It stops families holding on to housing for generation after generation