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Government inquiry sounds warning on Negative Gearing; One of the most destructive and inefficient policies in Australia's history hopefully on the way out
Topic Started: 21 Jul 2014, 10:58 PM (1,962 Views)
Timo
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Negative gearing rightfully in the cross hairs.


http://www.brokernews.com.au/news/breaking-news/is-it-time-to-scrap-negative-gearing-189816.aspx


http://www.smh.com.au/business/the-economy/murray-inquiry-calls-for-reform-of-capital-gains-and-negative-gearing-20140715-ztasc.html

http://www.macrobusiness.com.au/2014/07/the-coalitions-mounting-budget-black-hole/
Edited by Timo, 21 Jul 2014, 10:59 PM.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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Thatguy
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Negative gearing needs to stay for new investment. It should be time limited for 10 years after new land is released, buildings constructed or renovated (or some similar time frame).

The huge bulk of government subsidisation so people can pass on existing properties to 2nd, 3rd, 4th and 5th generation of buyers are completely wasteful tax subsidies. They provide no extra rental capacity at all and just help investors crowd-out owner occupiers.
Edited by Thatguy, 22 Jul 2014, 12:45 AM.
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Timo
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Thatguy
22 Jul 2014, 12:45 AM
Negative gearing needs to stay for new investment. It should be time limited for 10 years after new land is released, buildings constructed or renovated (or some similar time frame).

The huge bulk of government subsidisation so people can pass on existing properties to 2nd, 3rd, 4th and 5th generation of buyers are completely wasteful tax subsidies. They provide no extra rental capacity at all and just help investors crowd-out owner occupiers.
It's greed and corruption on an unprecedented scale in Australia.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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dachopper
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Thatguy
22 Jul 2014, 12:45 AM
Negative gearing needs to stay for new investment. It should be time limited for 10 years after new land is released, buildings constructed or renovated (or some similar time frame).

The huge bulk of government subsidisation so people can pass on existing properties to 2nd, 3rd, 4th and 5th generation of buyers are completely wasteful tax subsidies. They provide no extra rental capacity at all and just help investors crowd-out owner occupiers.
I completely agree, The original purpose for negative gearing was to encourage housing development. Now it's approaching it's matured state, and those with $ invested are years ahead of those entering or trying to enter the market. What ever direction they are forced to move their equity to, no matter where it is, will affect the other group.

The government need to only allow negative gearing on New housing developments period, that way the building and related industries expand, and as a result initially building prices will probably be driven up, locking FHB's out of the building market if they are not in mining job, but allowing them access to the old house market, which will eventually cool demand for new housing and thus prices.

And introduce an inheritance tax so we all get some of Gina's $$$
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stinkbug
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dachopper
23 Jul 2014, 10:17 AM
The original purpose for negative gearing was to encourage housing development.
Got a source for this claim?

I think you'll find the concept of negative gearing has been around for at least 80 years in Australia, and has nothing to do with the asset against which the gearing applies. It's a common misconception that negative gearing is specific to property. It's also a common misconception that negative gearing is a law - it's not. It's simply a part of a tax system that allows individuals to deduct the costs of earning their income from the income earned.

If you wanted to level the playing a bit with property (and other investable assets), return to the original method of calculating CGT. That would reduce the incentive to hold property (or other assets) for periods of more than a year but less than, say, a decade.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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K-town
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dachopper
23 Jul 2014, 10:17 AM
The original purpose for negative gearing was to encourage housing development.
Was it?
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peter fraser
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stinkbug
23 Jul 2014, 10:52 AM
Got a source for this claim?

I think you'll find the concept of negative gearing has been around for at least 80 years in Australia, and has nothing to do with the asset against which the gearing applies. It's a common misconception that negative gearing is specific to property. It's also a common misconception that negative gearing is a law - it's not. It's simply a part of a tax system that allows individuals to deduct the costs of earning their income from the income earned.

If you wanted to level the playing a bit with property (and other investable assets), return to the original method of calculating CGT. That would reduce the incentive to hold property (or other assets) for periods of more than a year but less than, say, a decade.
+1

I think that there is a benefit though. In times of high interest rates it does stabilise the property market by allowing investors to write off their losses in the year of loss, otherwise they would simply carry forward those losses. The net difference is minimal over time, but the cashflow benefit is immediate.
Any expressed market opinion is my own and is not to be taken as financial advice
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Trojan
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dachopper
23 Jul 2014, 10:17 AM
I completely agree, The original purpose for negative gearing was to encourage housing development. Now it's approaching it's matured state, and those with $ invested are years ahead of those entering or trying to enter the market. What ever direction they are forced to move their equity to, no matter where it is, will affect the other group.

The government need to only allow negative gearing on New housing developments period, that way the building and related industries expand, and as a result initially building prices will probably be driven up, locking FHB's out of the building market if they are not in mining job, but allowing them access to the old house market, which will eventually cool demand for new housing and thus prices.

And introduce an inheritance tax so we all get some of Gina's $$$
Another bear who blindly believes what he reads on doom and gloom sites. No wonder those sites keep churning out rubbish.
Negative gearing was introduced as part of Australian tax law where costs can be deducted from income. It is not specific to housing, shares, bonds or other investments.

As for inheritance tax, the rich will easily evade it. I'm not rich and I have already put the kid's inheritance in a family trust which remains in place after I am dead and buried.
Edited by Trojan, 23 Jul 2014, 12:19 PM.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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Foxy
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Zero is coming...

Timo
21 Jul 2014, 10:58 PM
Negative gearing is a crime against the first home buyers.
Peter
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Timo
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Mustapha Mond
23 Jul 2014, 12:35 PM
Negative gearing is a crime against the first home buyers.
Peter
More then that, the people of Australia in general. The speculation in housing it has created has resulted in the greatest vulnerability and asset bubble in history.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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