Bill shorten poised to take negative gearing.

As per attached rents didn't really rise during the period that NG was scrapped



and this..
The Abbott government’s Tax White Paper is expected to examine whether the government should abolish or limit negative gearing – an issue of contention since the mid 1980s when negative gearing was reinstated after the then Labor government scrapped it for a short time. It took away negative gearing in 1985 and re-introduced it in 1987, after house prices in certain capital cities fell and the property industry mounted political pressure to bring the tax break back.

Read more: http://www.afr.com/real-estate/residential/what-if-negative-gearing-were-scrapped-20131224-iyds7#ixzz405TSlGJd

 

This whole notion of NG being removed could be null and void once the full impact of the APRA credit tightening results in less property investment "in general" starts to really show...

Give it 12 months to see less available rental properties in the "rental pool", an increase in rents is likely as potential PPOR buyers and investors struggle with much tighter serviceability requirements.....so having a double impact, renters who want to buy a PPOR staying in rentals longer with less investors adding to the rental pool.

Add a growing population who all need to live somewhere into the mix and I can only see an upward direction for rents.

So by the time NG becomes a political sparring match "again", OZ could be in a bit of a rental shortage with today tonight reporting massive ques and rent "auctions" for average joe families struggling to find a roof over their heads....

Can't see NG being axed in that environment.

Or it could be something completely not like the above.....

Who knows, just throwing it out there....

 

Rents didn't rise last time negative gearing was cut as a result of those changes it's a myth peddled by the property industry to discourage politicians from making the change.

 

Thats not correct, they rose but only in a couple of cities did they rise greater than inflation.

 

I know rents rose what I am saying is that it wasn't due to the restrictions on negative gearing.

 

What if you buy an existing house in a good position and build new?

 

Would be interesting how the rules affect developers that keep their stock instead of selling. Although most would be positive geared before depreciation if it's a high profit development.

 

Depends on what you read. Some anti IP authors claim the 1985 NG removal had nothing to do with rental increases, sure, but the facts show that rents in Sydney and Perth surged.

Why only Sydney and Perth? Dunno.

But remember, once you start tinkering with something the ramifications could be far reaching. It ain't gonna stay the same. You might achieve something but you got to look at the side effects.

 

Just go neutral or positive geared. Then it's a non isuue.

 

Read what happened when labor removed it in the late 80s. If there is not incentive to provide houses a rental pool...then there will be none.

Housing is kinda propping up the economy at the moment...so would be a dumb move.

If negative gearing was removed a lot of people would not be able to keep their investments..

 

Agree @sash especially in inner/middle ring suburbs were yield is sitting at low as 3% in some area's.
NG in it's current form allows these investors to artificially inflate these yields via NG tax benefits..

 

Spot on......these areas will take the biggest battering.....the middle will do the best...

 

Incentive would come from improved yield over time (but I would not expect this to come from a sudden spike in rents). What specifically happened in the 80s and is it really the same scenario if NG was to remain for newly constructed homes this time around?

You said yourself your portfolio is positively geared... what incentivizes you to provide homes for the rental pool?

Yes, construction is boosting the economy. This would remain largely unaffected, if not boosted from the news that NG would only be available for newly constructed homes.

It would be grandfathered for existing investors: Shorten to unveil capital gains tax, negative gearing plans

It's like you are purposefully trying not to understand/discuss what is actually being proposed.

 

I think that a lot of people are missing what demand actually means. It refers to the people who have both the desire and means to purchase something.

The following will reduce demand:

• Banks increasing borrowing costs on mortgages, or the RBA raising the base rate.
• The APRA changes that reduce the debt an investor can easily take on.
• Removal of negative gearing, since it'll increase holding costs for a loss making property.
• Reduction of the capital gains discount, because it'll reduce the return, and make it potentially less profitable than other investments.

As @Natedog said, this could reduce the number of IPs, but unless @Tyler Durden's suggestion of a self destruct button is taken up, the properties will still be there. Either the investor continues to rent it at a market rate, or they sell it.

So there'll be lower demand (fewer investors in the market), and a greater supply (investors selling the dogs in their portfolio). That would put downward pressure on property prices, possibly to a level where FHBs can get in.

The way I see it is that the investing game has changed. It used to depend on easy and cheap borrowing, prices rising rapidly, and negative gearing to reduce holding costs whilst capital gains provide the big payoff. That's not really sustainable, as property valuations become increasingly divorced from rents and incomes.

The APRA changes were aimed at this strategy, and if negative gearing is reformed then it'll be another nail in its coffin.

 

I'm a little confused be the thread title. Bill Shorten isn't poised to do jack. He hasn't got a chance in hell of moving into the lodge. Just a desperate move by someone who is drowning.

There will be some minor changes no doubt to negative gearing, CGT and super conscessions but wholesale changes to negative gearing is not going to happen. There is no support for it within the Goverment.

 

I haven't quite read to the end but it is hardly surprising since the work done by Henry that a number of taxes will be closely looked at. Negative gearing has always been one very close to the spotlight.

In my crystal ball of future prediction (ha ha ha) I'm somewhat prepared. I have little access to CGT and NG at the moment as most of my purchases are in a DT. That which is in my personal name is only new construction so if they change to these rules then I'll be fine.

So there is little impact to me - the most important person in the world

For the general Australian good, it will encourage more people to invest in infill and construction which will create jobs - it's the same reasoning behind the FHOG being only or more for new builds.

Will it increase rents? I don't think so in terms of tax savings. There is likely to be so much grandfathered into it, that there will be plenty of established stock and everyone's 'new' constructions will eventually age anyway. The construction and supply of construction materials and flow on of those services will be of benefit though.

Will it help the economy? I don't think by much. Certainly not a massive change but it may help simplify the tax system and stop many a spruiker getting people to purchase to reduce their tax.

The most sensible way to use NG is via depreciation. No one should actually want to lose money but through smart investing they can write off quite a bit via NG and turn a slightly CF+ to even more CF+

Just my 2c.

 

Welcome Rossy

 

Sorry - new to posting business! This may be a silly question but if IPs purchased before July 2017 (existing not new builds) are allowed to retain negative gearing would that potentially drive some demand for investors to purchase existing properties before that date?