Labour negative gearing changes

Discussion in 'Investment Strategy' started by Aussie1980, 8th Apr, 2019.

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  1. Harry30

    Harry30 Well-Known Member

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    Sorry if I missed this, but have the ALP said anything about negative gearing of shares. Will the changes to negative gearing of property equally apply to shares?
     
  2. Perthguy

    Perthguy Well-Known Member

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    Given the current policy release... yes. That said, anything can happen.

    "From a yet-to-be-determined date after the next election 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
     
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  3. Aussie1980

    Aussie1980 Well-Known Member

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    Thanks everyone for your input.
    I guess it's a wait and watch approach.
     
  4. marmot

    marmot Well-Known Member

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    I think the GFC sorted out that problem a few years back .
    Especially for those that borrowed heavily and then saw some big losses in their share prices .
    But since history has a bad habit of repeating itself , there is probably a few that are piling back into shares using lots of borrowed funds.
    With interest rates at an all time low of 1.5%, the hangover hasn't gone away yet.
     
  5. Simon Hampel

    Simon Hampel Founder Staff Member

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    The rules for margin loans were changed post-GFC and it's no longer possible to build arbitrarily large margin loans based on increasing asset prices.

    Sure, there will be a few people investing their real estate equity into the sharemarket - but nowhere near in as many numbers as there were investing in margin loans in the lead up to the GFC.
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    One of the concerns (we havent seen a major correction for almost 10 years) with margin loans was a market correction. It would erase market value but leave the loan. Then the lender would require the loan to be paid down in true margin loans. But LOCs against property wont see that. But it doesnt mean negative equity doesnt occur.

    Thats one of the fears now. Some have gone long on shares after property dropped away and it could yet bite and trigger a double dip to the economy.

    Geared shares retain a high risk of market corrections as the equity can be erased but the debt doesnt move.
     
  7. Propertunity

    Propertunity Well-Known Member

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    SQM's view of Labor's negative gearing policy:
    SQM Research
     
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  8. E than

    E than Member

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    The “property couch” podcast Ben goes through it all with a detailed break down of an interview. Some very interesting facts and well worth a listen.