Silly question about Negative Gearing?

I don't see a problem with it from that angle. Problem is it interferes with home buyers (whom homes are for) they can't NG. It gives investors an advantage over the homebuyers and this can be troublesome when they're competing against investors.

I'd rather it stay, but I believe NG is incredibly unfair to home buyers. Without it there'd naturally be far more investors getting outbid by homebuyers than there is currently.

 

I completely agree, this country is a hell of a lot more good that bad and is full of opportunities available to a large % of the population and I am extremely grateful we migrated here from singapore.

that has nothing to do with negative gearing or the affordability discussion, it is entirely possible to be a great country that has some issues wOrth discussing and some potential changes worth implementing.

 

Finally we agree on something! Going to buy a lottery ticket today!

 

That is a great idea. But I need a hard-hitting title. I have come up with two but can’t decide on which one to use. They are:

“******** – Negative Gearing Increases Property Prices”

OR

“Negative Gearings Increase Property Prices - ********”​

Any thoughts on which one I should use?

Did you watch the ABC Lateline on Tuesday night?

It had a debate on negative gearing with two economists namely:

• Independent economist Saul Eslake for the removal of NG (apparently, he has had this position for 30 years)
  
  
• Sinclair Davidson, Professor of Economics at RMIT University and Senior Research fellow at the Institute of Public Affairs for NG to stay.

The good news is both sides put forward their points of view in a civilised and academic manner (Saul even quoted from the Grattan Institute). What I found most interesting from this debate was that neither side refuted the other side’s evidence or claims. My takeaway from the debate:- economists just don’t know 100% what the impact of NG removal will be; they have their theories and their modelling but that is it – theories and modelling.

It’s like the old story where you put 40 economists in a room and ask them an economic question. You will get 40 answers and they will all be different. But you will probably be able to pick at least one of them to support your point of view.

In my opinion, economists are worse than statisticians. Statisticians can grab any set of statistics to support a point of view. For example, which is the better performer, shares or property? One group of statisticians can select a set of statistics to show that shares are better while another group can select a different set to show property is. Both groups are using real historical data and they are both right.

Economists are trying to predict the future using economic theory and modelling. I feel weather forecasters do a better job of that and we all know how accurate they are.

Apparently the Grattan Institute says their economic modelling (note my comments above about my faith in economic modelling) shows that the removal of NG will reduce property prices by 2%.

So, the median house price in Sydney will fall by $20,000 from around $1M to around $980K. So, a $980K property is a lot more affordable than a $980K property!!!

So, the median house price in Brisbane will fall by $10,000 from around $500K to around $490K. So, a $490K property is a lot more affordable than a $500K property!!!

Come on. Surely a 2% fall doesn't makes it worthwhile. If property prices were going to fall by 50%, then I would consider supporting the policy.

 

Put up or shut up. Simple. I can lick my finger and be just as correct as you. But I know my limitations, and don't suffer from hubris.

How's this for a title:

Anecdotes from a statistically insignificant population of 1.

 

Use the heading that starts with ********. It will get readers' attention. On the other hand, you shouldn't sell many articles starting with the word Negative.

 

I actually thought you'd get 41 or 42 answers in this situation.

 

That sounds like an interesting bit of economic theory. As Pauline once requested, can you please explain.

That sounds like an entertaining piece of economic modelling. Did you get the outcome you were expecting? May be your assumptions were wrong?

Your timing is impeccable. Have your heard about the Your Voice Counts campaign. Their economic modelling (I know you are a bit of a fan of economic modelling) states that 18M Australians would be affected by Labor’s plans to scrap negative gearing for existing dwellings and its pledge to halve the 50 per cent capital gains tax discount. Oops!!

According to my new abacus, 18M is about 75% of the population. My new abacus is telling me that this a statistically significant portion of the Australian population.

I don’t believe Labor’s plans will impact the filthy rich; they will hurt those of us who are trying to get ahead, to increase our Net Worth so that we won’t be a burden on taxpayers in our retirement, etc. I know the following is anecdotal but you mentioned the “a” word:

I know of an apartment block where each apartment cost its owners between $1.5M and $4M. There are 24 apartments in the block and the ownership split is as follows:

• Half of the apartments are owner occupied. These owners cannot claim any negative gearing tax benefits.
  
  
• Two are rented. These owners are probably claiming the negative gearing tax benefits.
  
  
• The remaining 10 are vacant and probably used as personal holiday homes. These owners cannot claim any negative gearing tax benefits as there is no income.

Most Australians probably can’t relate to spending $4M on an apartment. What I find more difficult to comprehend is how, out of the 12 apartments that are not PPORs and are available for renting, only two are. The filthy rich have a different mindset. I know the Labor policy is not retrospective but even if it was, only two out the 12 would be impacted; the other 10 wouldn’t blink an eyelid.

I know this is anecdotal and not as strong as your trusty economic modelling but I don’t believe Labor’s policy will impact the filthy rich although Bill keeps telling us it is those he is after.

Maybe Bill will have to do a backflip if he wants to be PM?

 

I believe you could be Right; the opposite of wrong, not the opposite of Left.

 

I was trying to be Conservative (for a change).

 

Read the report from the Grattan Institute. Better still get a 12 yo to explain it you.

 

In light of the title, I do actually have a "Silly question about negative gearing"....

Can you negatively gear a loss against ANY type of income? i.e. say you had no PAYG job but had income from share dividends, or you are a company owner/director and received franked dividends from your company, these dividends all go on our individual tax returns. Can you still offset your investment property losses against the dividend income if those losses exceed the property investment income?

Cheers.

 

Which one please? the google search results doesn't really help
Hot property: negative gearing and capital gains tax | Grattan Institute - this one said "Contrary to urban myth, rents won’t change much, nor will housing markets collapse. The effects on property prices would be small compared to factors such as interest rates and the supply of land."

Grattan Institute report on negative gearing rubbished by PM This one said "The Turnbull government has escalated its attack on Labor's plans to reform negative gearing, insisting the reforms would wipe out property investors and rubbishing a contrary report by the Grattan Institute."



I will just let the stuff play out, can't understand it at all

 

Try to read both of them.

 

I did.

So Grattan said, the NG changes will save government money but no impact on pretty much everything else (rents, price, etc)
Turnbul said it's vice versa.

... so... I thought removing NG and CGT is about housing affordability? Oh well. I guess this is why I don't follow economy news

 

^^^ this. I want to see a policy where NG is reduced or restricted in a way that doesn't overwhelmingly benefit high income investors at the expense of lower income investors. I also want to know why Billy Bob has put up a policy that gives a free kick to 'the rich' while heavily impacting lower income investors. Isn't this the exact opposite of what a Labor policy should do?

 

Its probably best tbh. They would have you believe that the markets are either heading for a collapse, in a collapse or just recovering from a collapse.

 

Yep, that's exactly how it works, rental losses can currently be offset against any other type of income.

It's that unique treatment in comparison to other types of losses that make it a very logical target for change.

 

The Australian property market has been on the brink of imminent and catastrophic collapse for the past 15 years. In that time I have bought and sold multiple IPs and made a profit from those transactions. That's why I don't follow economists or listen to real estate agents (the market is always going up, or in a down market, it won't fall any further)

 

Economic modelling? I thought it was just a sour real estate agent.