Bill shorten poised to take negative gearing.

I am not negatively geared....I positively geared...I don't rely on gearing.

If they did change the rules...I would be snapping up houses as the punters panic!

When the smoke clears it will get interesting...as like rents will go through the roof as supply drop...as mom and pop investors get out in droves.

 

You don't rely on debt at all? You must be swimming in cash, impressive. Or not know what gearing is.

Explain where the supply of established homes go if investors are still able to negatively gear new properties... to be honest I thought you were better than repeating these sorts of 'memes'.

 

Mom and pops? I would have thought that American retail investors would be a small part of the Oz resi market

 

Prior to any changes the Property Council of Australia will fund the installation of a simple device into all established dwellings.



Negatively geared investors will press it on their way out the door to initiate a controlled demolition sequence.

 

The fantasy is that the price of established homes will drop and those 'working poor' renters who have been forced out of the property market by greedy investors will jump in a buy up all the excess stock. Everyone will be happy in the new utopia. We just have to dump NG and CGT concession to get there.

 

Of course it is not that simple, neither will it happen with such precision. Nor do I recall ever having suggested such fantasy is likely.

But yes I'd expect that over time with the dampening of investor demand we would see home ownership rise back to levels it has been in the past (more than several percent higher than it is today).

Do you agree with sash that the "supply drops" (if so, same question to you, where does it go?) and "rents go through the roof"?

 

I like the approach the US takes to negative gearing. It is fairer for the majority of PPOR owners, while still encouraging investment but placing limits to speculation.

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So how do these proposed changes affect positively geared properties?
Eg
$100,000 salary
$20000 expense
$30000 rent

Would taxable income be:
110000 or 130000?

 

Your taxable income would be $130000, as you couldn't deduct expenses during each year. When sold it would be sale price - (expenses x years) - purchase price = cgt payable.

 

Does anyone have a link to the paper that talks about this? (Not the smh articles that are extremely vague).

 

Why wouldn't you be deducting your expenses? Surely the NG thing is just about no longer allowing losses to be set against income from an unrelated source?

 

If the government wants to simplify the tax system then they should get rid of the CGT concessions.

The original point of the discount was to account for the rise in value of an asset due to inflation, but given that's fallen to 1.5% or so, it's pretty much a rounding error.

I'm not convinced that property investors are going to be able to increase rents quite so easily either. If I was facing a sudden rise, I'd either:

• Move further out to a cheaper suburb.
• Find a bigger place, and a room mate.
• Look at buying one of the investment properties in the fire sale as investors exit the market.
• Or point out to the landlord that I'm a decent tenant, and they might struggle to find someone to replace me as others are doing the other options.

As Guest says, dampening investor demand will rebalance the market in favour of first home buyers. Given the collapse in home ownership amongst the young (here's a British perspective of how bad it might get), I think that's a good thing.

 

My opinion the taxable income would be $110K (positive geared).

If it was negatively geared then the loss would be quarantined, carried forward and applied to future rental gains.

With over one million taxpayers using negative gearing, I think whichever side of govt decides to tamper with it (and the CGT concession) will be forked.

 

Circa 16 million in Australia eligible to vote (as of 2013, would be more now), roughly 35% of those would be renting, 5.6 million. You want to bet there isn't a large percentage of those unhappy with investors using negative gearing to buy more homes? Not to mention the home owners such as myself who would be fine with seeing it end?

I think you are badly misreading the situation @datto, Labor wouldn't be announcing this as policy unless there was public support for it. It's not going to throw the election by itself, but if I were to hazard a guess I think there would be as many or more against negative gearing as for it.

 

Probably just sour grapes by the majority of renters who never will buy a house even if NG is changed. Hope they can afford the increase in rents, which most likely will happen.

I'll toss a (gold) coin on that one lol. Don't get me wrong I'm a labor man myself. I'm also a property investor...i want my cake and eat it too

 

Why would rents increase?

 

Just following from what happened when NG was removed back under the Hawke govt. Rents surged.

It didn't take long for the govt to reinstate NG.

 

There are so many variables it's hard to know exactly how this may play out, I think a less restrictive policy similar to what Scott Morrison suggested is more likely.
Firstly you only need to look at the National Rental Affordability Scheme to see that the Government has and will subsidise rents. Rents are 20% below market value for eligible tenants of these properties. Many countries especially European ones provide substantial amounts of social housing, Australian state governments have done their best to sell off much of their stock and currently cannot provide housing to people most in need.

If NG was totally stopped some possible outcomes could be:
Markets where prices are stretched with low sub 4 or even sub 3% yields would likely suffer price drops, possibly there could be some initial panic by some investors along with D&G headlines. How far prices would fall who knows, maybe 10-15% and possibly greater relative to inflation.
Other markets would suffer less especially suburbs with higher yields and more owner occupiers. Yield would once again become important and generating an income stream immediately from a property would become crucial.
Some FHBs would take advantage of the new market conditions, I would stress some as they would still require sufficient deposits, incomes and nerve.

Many people who cannot and will never own their own property will still be stuck in a rental market with less properties available for rent, rents are likely to rise depending on local supply and demand. Just because a higher percentage of people may be able to purchase a property doesn't mean that a significant number of rentals won't be required. The market may take some time to stabilise.
There are many other possible outcomes, for example the hit to consumer confidence could slow down consumption, this could even lead to a recession. Hard to believe but if the number of people with NG properties is to be believed I think it's a possibility?

 

Debt with lots of cashflow is not an issue. Maybe you need to understand gearing...if you are positive to the tune of 6 figures would oyu worry?

Your negativity about property confuses me........it might be the dry Adelaide air....

 

Perhaps your point was simply that a change to NG wouldn't affect you, doesn't mean you don't rely on gearing (unless you aren't borrowing to buy).

Care to explain how the supply drops? Unless you mean the pool of available rental properties falls as the number of homeowners increase, but then why would rents boom if the pool of renters is also declining as a result?