Greens to curb negative gearing

If the government intervened in the first place, hence they should be accountable and then should interfere to fix. However, hard to do if you have those in power that created some of those problems (many from financial world in US moved then to positions in government).
Who is government, banks, wall street, these are all people, right? Who are companies, if not a group of people.
To be honest I don't think they have fixed anything (look with IAG, lent the funds to them, they repaid them, then paid back themselves huge bonuses again - no accountability), I think another large GFC is brewing, however they keep radar on those 'companies' that they cannot afford to fail. I have heard they now even monitor HUGE 'managed funds, not just the banks, so in case there's financial turmoil, let's close the taps everywhere...?
They could have saved 'Lehman Brothers', they didn't why be selective for some and not others?
I really dislike politics, all I try to do is somehow protect the 'tiny me' with the 'tiny wealth' I built.
I realise it is OUT OF MY CONTROL what 'they' will do, so no point worrying, I just try to find solutions ahead, what else can I do? You cannot change the day, night will follow, wether you like it or not we will have the spring after winter, and summer after spring and so on....like some disliking weather at certain times of year. You can dislike but you cannot change the circumstances out of your control you can only change yourself in such situations. That's how I think.

 

I couldn't agree anymore with all the things you have said, seems we hold very similar values.
I am sorry about your loss and thank you for being that good forum companion...
My escape too, at this moment are certain distractions, like this forum, close friends and family.
However the outcome is no good, out of our control, hence is such life!
So I tend to spend time with those that realise we won't be here forever, so if we can pass at least some of our experiences, words of wisdom that helps us, why not?

 

We agree on some things then, the only thing you can truly control is your own actions.

The whole GFC thing still smells fishy, no one was bought to account. This whole to big to fail is incredibly dangerous.

As for myself, I like big government and big taxes. It's like dirty intermittent electricity, you need a nice filter, regulator and battery to ensure a clean constant reliable supply. Sure you lose some, but its worth it.

 

This might be worth a read Prices for Too Big to Fail by Sorkin, Andrew Ross as it's a bit of an eye opener.

And, in post #121 above I think @MWI might have meant AIG, as opposed to an Australian insurance company, IAG, that Berkshire Hathaway has a fairly significant arrangement with...

 

Strongly agree.

Gawd no. Disagree here.

 

The Greens are thinking down the Labor line. Yes negative gearing is a sham milked by the wealthy and yes it needs to be reformed. Bring it on.
For the record before I get the expected 'we'll be ruined' response the reforms are aimed only at NEW PURCHASES with the rest grandfathered.
This will do wonders to hold house prices down but not sure the well off will like that.

 

I am not so sure. Grandfathering existing properties will make them special.

Why would the wealthy sell existing properties which have grandfathered NG benefits to buy new properties that don't have NG benefits?

If people stop selling properties, supply will decrease and prices might increase.

Something for the pollies to think about .

I know I will be hesitant about selling any of mine. In fact, I will probably move funds from my existing Offset accounts into new Offset accounts to make the new properties cashflow neutral and maximise the NG benefits from my existing IPs.

 

It is not only "milked by the wealthy".

The largest percentage of IP owners have one to two IP's, followed by the next largest group who have up to 5.

The smallest percentage of people own more than 5...and we know that the wealthiest people make up the smallest percentage of all folks out there.

Based on this; it would indicate that there are a huge number of Joe Average people who only have one IP - if they could afford more; they would be in the higher wealth class.

So; it would be fair to assume that it is also being milked by the Joe Average Mum and Dad investors...a bloody goo thing in my opinion; keeps the volume of pensioners down, and provides a large rental pool for those who need them.

 

I agree, I was reading up on negative gearing recently, this was an interesting read!

There were 1,213,595 individuals with a negatively geared property over the 2010/11 financial year

 

In 2010/11, the interest rate was higher than it is now. Last I heard the ATO stated that the number of negatively geared properties has decreased since then.

Sorry, I am too pooped to find a source.

 

The "well off" will benefit from Labors negative gearing policy and the modelling that the policy is based on indicates house prices may fall as much as 2%. Not sure that will bother the "well off" too much. Have you had a look at the policy? If you think it will stop money flowing from the "poor" to the "well off" then I suggest you have a closer read:

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.​

So the "well off" have 2 options.

1) if they have investment income tax liabilities, they can use negative gearing to wipe them out

2) carry forward losses to offset the final capital gain

"The poor" mostly won't have investment income tax liabilities, so option 1 won't be an option for most of them. "The poor" also won't be able to afford to carry forward losses, so option 2 is out for them as well. This is a policy where the "well off" can continue making money but "the poor" won't have that option. It is being taken away from them. The gap between "the poor" and the "well off" will increase.

The Labor policy is based on a report by the Grattan Institute Hot property: negative gearing and capital gains tax reform, which sates:

One concern with quarantining [negative gearing deductions] is that it will favour investors with more diversified portfolios. This is because investors with other positive investment income can make use of the loss write offs immediately, whereas those with only one loss making investment will have to wait until the income from that investment is positive. There may arguably be an equity concern if wealthier investors tend to be the ones with more diversified portfolios.

But this will do little to offset the improvement in equality from our proposed change. The impact will be small because most negatively geared investments start to generate positive income – and therefore losses can start to be written off – within five years. And those receiving sizeable tax benefits from immediate loss write offs against wage and salary are disproportionately those on high incomes (Section 3.4). And in any case, even if those on somewhat lower incomes are disadvantaged slightly more, policy change should still be pursued. Not every principled policy change will be progressive in every respect.​

It is clear from this report that the proposed changes are to pursue an ideological agenda and not to make the system fairer.

https://grattan.edu.au/wp-content/uploads/2016/04/872-Hot-Property.pdf

Positive plan to help housing affordability

 

Inside the Greens: A party in turmoil - Four Corners

Here's a peak into the s**tshow they call the Greens party.

This is why my compass will always be slightly tilted to the right. The left is born out of radical activism and the SJW social point scoring phenomenon will always take precedence over real effective policy to improve or heaven forbid 'progress'. IMO of course. I gotta hand it to Brown, Milne and Di Natalie for managing such a circus and still campaigning for mildly reasonable outcomes for the minorities and the environment. After all isn't the reason they're still in parliament because their heart is in the right place? Never mind having no idea on how to effectively implement their good intentions?

I don't think we have to worry about the Green's having much input into policy anytime soon. As a first time investor I'm thankful negative gearing is an option to transition into self funded retirement and break the cycle of my family relying on the government or as my working class father would say: The unions having our back! *Sigh

Disclosure: I actually voted labor in in the last WA election. (They promised a train to my IP). Which is more than the libs have done during the largest mining boom in Australia's history.

 

there is your first mistake...believing a Pollie promise.

They are all fabulous at promising the world and delivering an Atlas.

 

@propertylad , what happens in the next election, if three candidates promise a train ti your IP?

Hopefully, Elvis (or someone who looks like him) is not in the running...

 

it is all about the votes at the booths ( not afterwards unfortunately)

 

Then I vote liberal of course!

 

You are correct. That is why negative gearing in its current form needs to be amended. SHorten has the correct answer....but the 'money' is pushing against him because this is a big big deal for wealthy people especially. Property investors at all levels of the wealth spectrum surely do not want negative gearing touched but guess who is subsidising this?

 

I am surprised you would say Shorten has the correct answer because the Labor negative gearing policy won't touch the wealthy. In fact, the wealthy will directly benefit from it.

The "well off" will benefit from Labors negative gearing policy and the modelling that the policy is based on indicates house prices may fall as much as 2%. Not sure that will bother the "well off" too much. Have you had a look at the policy? If you think it will stop money flowing from the "poor" to the "well off" then I suggest you have a closer read:

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.​

So the "well off" have 2 options.

1) if they have investment income tax liabilities, they can use negative gearing to wipe them out

2) carry forward losses to offset the final capital gain

"The poor" mostly won't have investment income tax liabilities, so option 1 won't be an option for most of them. "The poor" also won't be able to afford to carry forward losses, so option 2 is out for them as well. This is a policy where the "well off" can continue making money but "the poor" won't have that option. It is being taken away from them. The gap between "the poor" and the "well off" will increase.

The Labor policy is based on a report by the Grattan Institute Hot property: negative gearing and capital gains tax reform, which sates:

One concern with quarantining [negative gearing deductions] is that it will favour investors with more diversified portfolios. This is because investors with other positive investment income can make use of the loss write offs immediately, whereas those with only one loss making investment will have to wait until the income from that investment is positive. There may arguably be an equity concern if wealthier investors tend to be the ones with more diversified portfolios.​

But this will do little to offset the improvement in equality from our proposed change. The impact will be small because most negatively geared investments start to generate positive income – and therefore losses can start to be written off – within five years. And those receiving sizeable tax benefits from immediate loss write offs against wage and salary are disproportionately those on high incomes (Section 3.4). And in any case, even if those on somewhat lower incomes are disadvantaged slightly more, policy change should still be pursued. Not every principled policy change will be progressive in every respect.​

It is clear from this report that the proposed changes are to pursue an ideological agenda and not to make the system fairer.

https://grattan.edu.au/wp-content/uploads/2016/04/872-Hot-Property.pdf

TL;DR under Labor's negative gearing policy, the wealthy get wealthier and the less wealthy get even less wealthy.