Do you think negative gearing should go?

Some of them do not consider IP as a valid investment class and prefer to barrack for shares. Expect them to cheer at anything that will degrade the environment for IP.

 

Indeed, Could be the case mate.

For me, I just see NG as a way to offset some short term costs in deals that I think will have good CG/cashflow at the end. Its not going to make me or break me, but i rather have some money back than not, which is silly to even contemplate having less money back if possible to avoid imo. That's all NG is to me, especially on the reno deals.

 

I'm not sure, it depends if a positively geared investor found this to be an issue or not..

 

If they get rid of it people will complain how property investors got rich using the tax man and now they themselves don't have the same opportunities afforded to previous generations.

Leave it the way it is. Property investing is a business, and just like all businesses I want to pay as little tax as possible and make as much money as possible.

 

One might consider that the tax office, and maybe the treasury, and, more importantly, a bunch of politicians, who have recently become of the view that the cupboard could be bare (on their watch), have a zero care factor on what various investors conclude.

It could be plausible that they might consider (after they have weighed up the views of their constituents) such investments as gaming the system.

Who can tell how awkward this might become.

 

The only thing we really have to go on is what happened last time.
Rents went up by all accounts.

 

I'm not clear on how they intend to cut out negative gearing.
Currently, income that is taxable is added up and then expenses deducted leaving the taxable amount to be worked out.

Are they going to make all expenses against the property not tax deductible?
But make you pay tax on the total rent coming in.
If this happens, on rent of $20,000 per annum, I would pay around $6,000 tax extra.

Are they just going to say that the loan interest is tax deductible?
In which case, I'm still paying tax for the rent coming in.

Now if an investor was positive or neutral, they will still pay extra tax.
If an investor had no loan, they are already being taxed.

So to take out NG would seem to affect most investors.
It's ok if there is room in the budget for paying increased taxes, but most Mum and Dad investors are up to their necks in debt.

Stats show that most investors don't get more than 2 houses. So I would think that there would be a decrease in their income.

Those with 5 or more houses will have higher incomes but a larger NG. Some of those people are stretched now so I would assume in having to pay extra tax, could be enough to push them over the edge into not being able to keep the property. Which would be ok except if they bought in places where the value had dropped and they lose money when they sell. Those people could have some pain coming.

In the WA market, they are selling into the owner occupied market so rental properties will decrease but as owner occ will buy them, there will be a balancing effect.

I'd like to know more about how the NG removal will be carried out and then I could work out how that would affect me and my community.

 

Remembering this is a proposal and not a policy, the answer to your last question is 'no'. The way it is intented to work (if implemented) is this:

From 1 July 2017 losses from new investments in shares and existing properties can still be used to offset investment income tax liabilities. These losses can also continue to be carried forward to offset the final capital gain on the investment.​

Positive plan to help housing affordability