There is an interesting article in The Australian today (8/05/06), regarding the cost of negative gearing to taxpayers and its rate of change over the past couple of years. It also has some interesting statistics about the proportion of property investors who make a loss (negative gear) vs make a gain and pay tax (+CF). The link is attached below, have a read and post your thoughts about the situation and trends.
http://www.theaustralian.news.com.au/story/0,20867,19057800-2702,00.html
Cheers
Hi Chris
Sure I guess the number of negatively geared properties vaies from time to time throughout the property cycle but I’d hate to see the results if the government stopped negative gearing benefits for residential property. The bill for “public housing” would explode.
Cheers, Paul
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Originally posted by PaulDobson:I’d hate to see the results if the government stopped negative gearing benefits for residential property. The bill for “public housing” would explode.
Why? And would it “explode” by more than an additional 3.5 billion dollars per year?
F.[cowboy2]I believe if the Govt. Cancelled Neg Gearing Benefits, they would send most mum and dad investors to the wall. They would also increase the costs of Private Housing astronomically. This would in turn lead to an increased number of homeless etc.
Could be an interesting experiment though…
Stuart Milne
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Mob: 0404 056 055Originally posted by Stuart Milne:I believe if the Govt. Cancelled Neg Gearing Benefits, they would send most mum and dad investors to the wall.
What if they removed it for future purchases but left it in place for existing investments? As in, non-retrospective changes?
They would also increase the costs of Private Housing astronomically.How so? I would think the cost of private housing would absolutely have to fall back to levels where FHBs were able to afford a decent house at 3 to 5 times salary multiples…
I guess you mean public housing, but I think that an equilibrium would be reached eventually.
F.[cowboy2]The government droped tax benifits of negative gearing for 2 years in the 80s it was the worst thing they done people had nowere to live and the government had to house people it cost them a fortune rents went through the roof so they went back to tax benifits for negativly geared propertys
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[email protected]Many investor’s such as myself that I know ie getting started with a couple of properties and learning as they go, are using this as a strategy to reduce the need for reliance on superannuation and government support via the pension. I fall right into this category, as super and government support I believe are unreliable as the changing of the wind as we have seen by yesterday’s federal budget. I would like to think that the government realise this and that if they were to change the rules for investing it would take a huge toll on middle income earners such as myself. So whilst I am getting on my feet towards CF+ properties, I am holding my breathe that the rules don’t change![headphone]
PS, thanks Chris for posting the article.
Originally posted by Rikky:The government droped tax benifits of negative gearing for 2 years in the 80s it was the worst thing they done people had nowere to live and the government had to house people it cost them a fortune rents went through the roof so they went back to tax benifits for negativly geared propertys
I’ve heard this story many times before, but the stats just don’t seem to support it. There was a localised rental squeeze in Sydney (which was likely unrelated to the change)… Can you provide any evidence of this claim (statistical fact, not anecdotal)?
F.[cowboy2]
Surely the fact that the government scrapped it is enough evidence, though I also don’t have any statistics to back the story up.
Wylie
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