Tax deductible PPOR mortgages idea circulating

Discussion in 'Accounting & Tax' started by paulF, 20th Jan, 2017.

Join Australia's most dynamic and respected property investment community
  1. paulF

    paulF Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    2,103
    Location:
    Melbourne
  2. New Town

    New Town Well-Known Member

    Joined:
    8th Sep, 2015
    Posts:
    742
    Location:
    QLD & NSW
    Seems to go against the basic concept of deductions being related to business type income.

    But its a cheeky response to the anti negative gearing brigade as they could now claim tax deductions. Might change their tune?
     
    Dave Ward likes this.
  3. paulF

    paulF Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    2,103
    Location:
    Melbourne
    It is indeed but at the same time i think this will put FHO on the same level field of investors!
    Budget blowout would be massive but might the Libs an election!
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    Currently people are criticising negative gearing as it leads to speculative investing pushing up house prices.

    Make gearing available to owner occupiers and the levels of speculation will be far worse.
     
  5. Dan Donoghue

    Dan Donoghue Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,679
    Location:
    Gold Coast, QLD
    How would they calculate it? We don't get tax relief on the repayment, we get tax relief on the portion of the repayment not covered by the rental return. There would be no rental return on a PPOR, If everyone received tax relief on their normal repayments then they would have to recoup the tax from somewhere else.

    What would be cool would be to incentivise people to save and give tax relief on extra payments or payments into an offset but even that I think could get out of hand quickly and end up costing more than it would be worth. If they capped it it could work, say tax relief on up to $1000 worth of extra payment per month, it would encourage people to not go bananas and leverage themselves too hard and therefore should help protect people when rates rise.
     
  6. Indifference

    Indifference Well-Known Member

    Joined:
    30th Jul, 2015
    Posts:
    977
    Location:
    Banana Republic
    Nothing new with this concept.... look at the USA for those not aware.

    Doubt it'll get up here though
     
    tobe likes this.
  7. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    6,377
    Location:
    Qld
    USA has this, but offset by annual property taxes.
    Marg
     
  8. tobe

    tobe Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,814
    Location:
    Melbourne
    Give it to oo, discounted by a percentage. Take it away from investors. Job done.
     
  9. Tony3008

    Tony3008 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    972
    Location:
    Docklands, Victoria
    Back in UK until 1963 they handled this by applying a notional rent to a PPOR (Schedule A) but after it was abolished they continued to allow mortgage interest as a tax deduction until the 1990s.
     
    JohnPropChat and Dan Donoghue like this.
  10. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    They would not do this unless there is other tax somewhere, like cap gains on PPOR for example.
     
  11. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,572
    Location:
    Sid en e - olympic city
    Not likely, renters won't get a deduction :)
     
    New Town likes this.
  12. CK_Invest

    CK_Invest Well-Known Member

    Joined:
    4th Apr, 2016
    Posts:
    212
    Location:
    Sydney
    not against the idea, in fact I enjoy this benefit currently as I live in hong kong

    however together with this, we also have housing rental being tax deductible as well which evens out the playing field too for those unable to get on the property ladder.
     
  13. marty998

    marty998 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    627
    Location:
    Sydney
    There's what... $700(?) billion of owner occupied housing loans out there... at 4% that is around $28-$30 billion in tax deductions. Assuming a marginal rate of 34.5% you're looking at a $10 billion hit to the budget?

    If rates went to 7% you can see how this spirals very quickly.

    I would presume the government would introduce some form of CGT on the family home to offset all this...
     

Build Passive Income WITHOUT Dropping $15K On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia