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Silly question about Negative Gearing?

Discussion in 'General Property Chat' started by moyjos, 8th May, 2016.

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  1. moyjos

    moyjos Well-Known Member

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    why is negative gearing such an issue? Isn't interest a legitimate cost of business?

    I don't understand why our business is perfectly OK to claim costs of business ( stock costs , overdraft interest fees, accountant fees, etc) but investors are bagged for it?

    is the problem that investors are not "businesses"?
     
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  2. Skilled_Migrant

    Skilled_Migrant Well-Known Member

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  3. Bullion Baron

    Bullion Baron Well-Known Member

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    They may be legitimate deductions, but in many (probably most) cases it's a speculative loss making exercise in the expectation of future capital gains. Can you not see how that would irk home buyers who are being priced out of the market? Especially when in some markets investor activity has been seen at levels of 50% or greater...

    Not all small businesses can claim a loss against salary/wages, even when it is a legitimate deduction...

     
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  4. Leo2413

    Leo2413 Well-Known Member Premium Member

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    It allows a large group of people to take out their frustrations of lack of financial progress in life on easy targets - individual investors, rather than taking self responsibility for where they have ended up in life with regards to their finances.

    Thats all it is. Will never change. The blamers will continue to blame while the doers will continue to build amazing lives. This will go on and on.

    All depends on which camp you want to join.

    My opinion.
     
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  5. Coota9

    Coota9 Well-Known Member Premium Member

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    Scrapping negative gearing would be like many political party policies- short sighted as it seeks to claw back revenue now and not take into account the future impacts of this.
    Do governments want to fully fund people's retirement via the pension or assist people who want to fund their own retirements via NG concessions!!
     
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  6. bob shovel

    bob shovel Well-Known Member

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    I concur (you said it much nicer than i would have :))
     
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  7. moyjos

    moyjos Well-Known Member

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    I understand the "blame issue".
    I don't get the legal side of it.
    If neg gearing got scrapped, why would I be allowed to claim my business overdraft interest fees as legitimate deductions?
    I just don't see the accounting difference
     
  8. dabbler

    dabbler Well-Known Member

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    You sound like Malcolm, that is one of his points exactly, but I think the Labour guys want to remove the ability from shares etc too, so you can't claim it against your wage income.
     
  9. wombat777

    wombat777 Well-Known Member Premium Member

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  10. HUGH72

    HUGH72 Well-Known Member

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    Come on @Bullion Baron, for much of the country including your city you have to look hard to find a property which, if purchased with a 10% deposit would be significantly negatively geared.
    SVRs are now so low that a 5.5- 6% yielding property most likely will not generate any loss.

    It's a non event outside of Sydney and Melbourne where, I would imagine that it would be frustrating for FHBers.

    Where I live in regional Qld anyone who has a full-time job can afford a property of some sort, this isn't a problem for much of the country.

    What's happening here as @Leo2413 described is frustrated home buyers looking for someone to blame and a political party looking for a vote winner.

    Nothing more.
     
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  11. kierank

    kierank Well-Known Member

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    Reminds me of an old quote:

    "If you really want to do something, you'll find a way;

    If you don't, you will find an excuse."

    Author Unknown​

    Probably more applicable today than ever before.
     
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  12. Bullion Baron

    Bullion Baron Well-Known Member

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    Assets/businesses are treated differently for all kinds of reasons, there is no universal consistency from an accounting or taxation perspective. I've already highlighted that some businesses can't have losses negatively geared against salary/wages, instead the losses are carried forward. Under Labor's policy you don't forgo the deduction, you just have to carry it forward rather than offsetting it against unrelated salary/wages.
     
  13. peastman

    peastman Well-Known Member

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    Thoroughly agree with you. Expenses incurred to earn an income are tax deductible. There should be no difference with what sort of business it is.

    I would also say that given a choice, the vast majority of landlords would prefer not to be negatively geared, but actually profitable. It's just that like most businesses, it can take some time and effort to get there.

    Until then, the real winners are the renters, after all, they get to live in a place below cost. It's a bargain.
     
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  14. kierank

    kierank Well-Known Member

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    The APRA Retirement Standard states a retired couple needs an income of just under $60,000pa. If one's assets are in Super and one draws the minimum payments of 4%, then this couple needs $1.5M in Super (is that where ScoMo got his $1.6M number?). If the assets are outside Super, they will need more.

    The Stardard assumes this couple owns their own home (say, $500K). In total, $2M in assets or $1M per individual.

    So, why is Bill Shorten so anti 'Malcolm's millionaires'? He should be encouraging everyone to become millionaires, especially those who are working hard, taking risks by investing, etc. If more people owned $1M of income producing assets, our welfare bill would be a lot less.

    If he wants to be anti someone, go after Billy's Billionaires!!!!!
     
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  15. mrdobalina

    mrdobalina Well-Known Member

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    How is this any different for investing in any other asset class? such as equities, commodities, forex, etc.
     
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  16. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I need to keep the language PG until some of the kids have reached maturity.
     
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  17. Bullion Baron

    Bullion Baron Well-Known Member

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    Housing is a basic human need.

    But yes there are many differences between these assets, would be wasting my time explaining the obvious to you, but in most cases costs incurred when speculating on forex and commodities would not be deductible against your salary/wages.

    Would you support the financialisation (introduction of investors) for the basic water supply making clean water excessively expensive for those in Australia who need it?
     
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  18. wategos

    wategos Well-Known Member

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    Actually it exacerbates the welfare bill, one person obtaining more properties (helped by negative gearing) and a resulting increasing number never owning their own home, will ultimately be more of a drain. Because that's what negative gearing has done, lowered the home ownership rate in Australia.
    We know that NG does not affect rents, thoroughly debunked but this myth/lie keeps being spouted even by the corrupted politicians themselves. Removing negative gearing might reduce house prices, but it certainly will not increase rents.
    Three myths on negative gearing the housing industry wants you to believe

    People have a right to be p´d off at government handouts to speculators at their expense. Negative Gearing is a massive policy failure.
     
    Last edited: 8th May, 2016
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  19. kierank

    kierank Well-Known Member

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    If NG properties have lowered the home ownership rate in Australia, can you explain how positively geared properties have raised the the home ownership rate?

    From your post, can we also assume that positively geared properties have reduced the welfare bill? if so, please explain.

    Which type(s) of investment properties do you support?
     
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  20. sanj

    sanj Well-Known Member

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    If it is indeed a legitimate cost of business, and I feel it is, then losses generated from that should be offset against future gains, just like in business.

    whats usually being debated is the ability to offset it against personal income
     
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