Robert Kiyosaki calls for end of negative gearing

Scrap the incentives for bad decision making

Great discussion starter but does it pass the pub test?

It's fine to suggest the abolition of NG however there's no balance - what's in it for me? What taxes will go (land tax & stamp duty are state taxes).

 

I must say although we benefited from NG, this policy is bad. But most of Australians are claiming NG so abolishing it completely will always get into a big debate - and cost election.
Imho, should have a cap xxx per year

 

Or instead of abolishing NG completely just ring fence it to the investment against future earnings from that investment.

 

That was actually the plan many years ago.
Most people on boths sides of the argument unfortunately could not discern the difference and went for hysteria instead.

I doubt it can be done any other way unless the greens decide.

 

Don't care if the remove NG going forward, as long as they grandfather it

 

I'll take the abolishment of land taxes over NG any day of the week. Sadly that'll never happen.

 

Given that RK's circumstances as a foreign investor gives him very little opportunity to negatively gear in Australia he's going to have significant bias.

Also with current low rates, negative gearing isn't really the windfall the general public seems to think it is.

Overall I couldn't care less, but abolishing NG would create a lot of opportunities for cashed up investors.

 

I suspect this would push rents up. Didn’t something like this happen several years ago with the result of rents going up? And then the rules were changed back?

 

Then we'll hear about the tightening of the rent market too.

Something else for the Millenials to gripe about - "I can't afford to rent"

 

“I have another name for negative gearing: stupidity,” Mr Kiyosaki said. “It gives you a tax break for losing money, which makes no sense at all to me."

Sorry, he's just dumb.

I know plenty of people who have bought into a NG deal to make massive dollars later on.

To unequivocally say that buying a NG property is "stupidity ", is stupidity.

 

So what happens if it's abolished?

My deductions can only equal the income from the property or no deductions at all?

 

Negative gearing isn't a separate law, right. It's just application of the general rules around deductions. No different from any sole trader business runs at a loss can be deducted against the person's employment income. So there is nothing to abolish. A new law would have to isolate property related losses as a separate class (like capital gains) or specifically limit s8.1.

 

I think old kimosabi is first to mention it and admittedly he dumbed it down to dumb. He got it quite wrong. Neg gearing can change cashflows to positive but that comes from a subsidy through the tax system. That the element he should have mentioned. A change of Govt and post pandemic need to find tax revenue will see a shake up of elements of our existing tax system in the near future. A change of Govt will ALWAYS blame the debt of the former Govt. Thats how Keating got CGT through. Howard bought in GST based on a similar need and a "plebicite" he said. "Reform" was the buzzword. Its going to come back. Anyone who changes neg gearing will need a majority win.

In the UK and NZ they focussed on reforms that targetted the interest. The UK reform said - As a govt we wont allow tax deductions for you borrowing money beyond 25% of a property. Other taxpayers are subsidising that. You can still borrow BUT the tax deduction isnt available. Investors screamed. Non-investors thought it sounded fair.

The belief that the 50% CGT discount is a certainty is also a high risk for new laws. Make it 25% or 33% like super funds get ? A 25% CGT discount would raise the tax take by up to 11.75% of $11750 per $100K of gain.

 

I don't think Labor will be stupid enough to go into the election this time as NG removal an official policy, but once they are in power they will make various "small adjustments" and eventually change the entire thing (and maybe CGT discount as above). They'll probably have such a large majority they can do what they want.

Coalition will try the whole "can you promise to voters you will not change negative gearing if you are elected?" Politics is often so predictable.

 

No that’s not what happened. This old chestnut was comprehensively fact checked about 5 years ago after a claim by Joe Hockey.

This article describes the history and what really happened:
Fact check: Did abolishing negative gearing push up rents?

 

If they want to become a one-term party, and give liberals a great slogan along the lines of "we'll reverse everything they're doing" similar to what Abbott did a decade ago, then that's the way.

If they're gonna do it, I suspect they'd take it to an election similar to Howard with the GST. I doubt they try - they've been on the outside for 20 of the last 26 years remember - they're not gonna do anything to rock the boat once they get in.

 

I am panicking .. I am going to search for his latest views right away .. I think that might result in me subscribing to his podcast .. no I think I should buy a book or even go to his next seminar (I bet there is one coming in next few months and the organisers helped pay for this article).

See how it works .. grab attention .. get clicks .. sell content!!

 

A thinly veiled advertisement?

 

Oh they wont make such a stupid announcement now. They will claim to keep things as they are now. They will hope they win both houses. Then next budget (or a mid term budget update !!) they will claim they have a plebicite and the dire state of finances after the pandemic caused by ScoMo is worse then they let on. It would be. All Governmnets hide finnace issues. Wham its now law. This is page 2 of the politicians playbook. Anyone who thinks ScoMo is a tool needs to consider the effect of allowing the ALP control of both houses. It will be like electing the devil in.

 

The impact of neg gearing back then was fraction of its present scale across the economy as seen by the $ impact of the value of neg gearing n real dollar terms year on year. Loans were different back then and you couldnt buy 3-5 homes unless you saved the money. The change was also so short lived and at the same time as the economy crashed returning it was like a stimulus. Very different times.

And around half of properties are +ve geared from older ATO data : Negative gearing cost reaches $13 billion a year

When the ALP overhauled its policies it didnt set these in stone. They will blame the panedemic and the Libs. Gillard lied, Rudd lied, ScoMo lied. They all tell ****ing lies.