"Shadow treasurer - Chris Bowen

So if an investor doesn't buy the property, who does? A home buyer. This effectively increases the supply of "homes" for home buyers, which in turn reduces the price of property and in turn decreases the rental supply i.e. less homes for people to rent.

The market is made up of investors and home buyers (generally). If you reduce one side of the demand equation by removing investment buying, the price of the property goes down (less buyers competing for the same dwelling) and rents go up (same amount of renters competing for a smaller pool of rental properties).

You are correct in that the physical amount of supply doesn't change but it re-balances the market in terms of the intent of negative gearing.

- Andrew

 

but less renters, all things equal

 

You think that all those renters can just conjure up a deposit and afford to go straight out and buy a house? Have a look at that attachment below.

There is a reason that historically 30% of people rent and it's not really related to house prices.

- Andrew

 

it s a flow, someone will buy these existing dwellings, if not investors then they were/would have been renters

 

So you're saying that every property that is no longer a rental translates into a renter becoming a home buyer?

 

@Deck. The government brought in negative gearing many years ago when the state govts radically reduced their funding of public housing, and pre-NRAS. It was a means to keep up supply of rental properties without the govts being responsible for managing and maintaining their stocks. They aimed to encourage private investment into housing which was previously a state/city provision post WW2.

We also know that the private sector can manufacture or produce housing for lower-income renters far more economically than state entities like QBuild. An example of QBuild's incompetency was when the commonwealth govt was building new school halls across the country during the cash handout days post GFC. QBuild tended my local primary school $400,000 to build a colourbond indoor sports hall (a giant garage) when a local building company got the contract for $100,ooo. Shortly afterwards, the new LNP state govt disbanded QBuild.

 

Do you see negative gearing as a subsidy to reduce someone's tax?

Isn't negative gearing only that if you over pay tax from one source, you can net the losses from another source so that you arrive at a net taxable income position?

No one is subsidising anyone under negative gearing. It is not a benefit, it is just the calculation of a net taxable position, like everyone else.

Isn't everyone entitled to just pay their net taxable income? The alternative of not netting, means that some people over pay tax and get their refund in dribs and drabs over the coming years and decades, at the whim of government.

Perhaps you can help me understand how there is a subsidy or a benefit via negative gearing?

 

at one point yes

anyway it s grandfathered and NG does not matter that much anymore and for a foreseable future unless you like loss making properties with no or very little capital gain

 

Personally I don't care if they keep negative gearing or limit it to apply the losses to investments. Either way, the market adapts and reaches equilibrium.

The problem I have with the Labor proposal is they want to put loopholes into the legislation to continue it for a particular class of investment (new properties). Loopholes like this tend to benefit a very small group at the disadvantage of everyone else.

The problem with most of Labors proposals is they follow a reasonable course of logic until it doesn't suit them any more. At that point they insert self servicing loopholes.

 

And in some cases "new property" will make an appalling investment choice. So the only driver for (an an example) a glut of OTP apartments will be the spruiked tax benefits of negative gearing sold with the merits of Div 40 / 43 and when highly geared - Sold on the merits of neg gearing and nothing more. It could be a way for gullible investors to be sold a dud property where a neutrally geared property or existing property in a different location etc may be a better opportunity.

The Labour tax policies are very scattered. When read in combination they have potential to do one thing in common. Tax the shi7 out of anyone who they feel has worked hard or attempted to self assist their own wealth. They are all listed here :

Coalition v ALP Tax Policies

God help us if the states all become ALP. The rate of GST could also be a lucrative source of more tax revenue.

 

In the ALP website, they say: "Labor will limit negative gearing to new housing from a yet-to-be-determined date after the next election. All investments made before this date will not be affected by this change and will be fully grandfathered."

Does this mean that if we already hold an IP, we will be able to continue claim loses as long as we hold the property even for many more years?

 

That is what they said. But no laws have been enacted yet.

Gillard told lies last time. The yet to be determined date could be 30 June 2018 maybe ?

 

What bank in their right mind would loan money to such great savers, especially after the RC?

 

But those properties are purchased under current law, so as you say that date will be june last year and not a future date,

 

That would be most investment properties in Australia, wouldn’t it?

 

It does appear that way based on the information provided so far, yes. Of course, it is what is written into the legislation that will matter.

- Andrew

 

Ok well best leave it here then as clearly our respective understanding of economic theory is worlds apart.

- Andrew

 

Big word LOL

 

I can interpret this two ways:

1. The announcement and the date will both be after the election.
2. The announcement of the date will be after the election BUT the date could be one prior to the election.

Don’t trust a pollie is my mantra .

 

It's actually two words. 1 + 1 = 2

(send me a private message if you'd like me to explain how that works)

- Andrew