That may be your own personal opinion, but it's not my view, nor is it the view of the government / ATO, nor the majority of voters. Buying and maintaining property to rent is just as legitimate an endeavour as buying shares or mowing lawns or any other endeavour that an individual might conduct with the aim of bringing in some extra income.
The housing sector is the second highest taxed sector of the economy, contributing $40 billion NET revenue for the government per year via stamp duty, land tax, tax on rental income, GST on new dwellings, rates, development fees etc. The truth is highly taxed property owners are subsidising essential services for low taxed renters.
The tax deferred (not forgone but just deferred) via negative gearing is a drop in the ocean, and if those losses were not claimed against personal income today then they would simply be claimed against future IP income tomorrow. The net result is zero - the government doesn't lose any money over the long term by allowing expenses to be claimed immediately rather than carrying them forward.
So the 'taxpayers' (by which you really mean 'renters') are not subsidising anything. The 'taxpayers' are actually subsidised by the $40 billion net government revenue contributed by the housing sector every year. So remember that next time you drive on a road or use a hospital or take your kids to school. Taxes taken from homeowners enable you to do all that. We're sudsidising you. But you don't hear us whinging about the unfairness of it all.
Shadow,
We have been over this, you know this is wrong wrong wrong.
Sums are right but the assertion is completely wrong. What you are alleging is that investors contribute a revenue stream through the purchase of investment properties that would otherwise not be realised, this is just plain wrong. What you are saying is that investors won't exist and no properties will be purchased by them if negative gearing didn't exist.
That properties are sold to investors that would otherwise sit idle without negative gearing so without NG this revenue steam would never exist. That is not right buddy.
Also you mentioned $40b in revenue total pa, this is investors and OP alike. If you consider recent figures show NG costing the nation around $36b (2011/12) that's lost PAYG and deductions, then it's not costing us $2b pa it's a hell of a lot more. NG Investors make up 40-50% of properties purchased in the last 24 months. So based on that they are only generating $15-20b of revenue but costing $16b more, that's how I read this anyway.
So take your renter hate rant and tone it down unless you can prove to me that we are a blight and you are an economic contributor.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
1. Probably between 10-30% of investment properties are sold at a loss so the negative gearing benefit to the PI is never recovered.
What negative gearing benefit? In these cases it would seem that all NG has done is allowed them to lose more money. You do know that you can't get a deduction and also spend that same money on yourself, right? Seems to me the benefit in this case is all to the tenants and the eventual buyer.
Do you have anything to backup your assertion about 10-30% of investment properties being sold at a loss or did you just make it up?
Quote:
2. The difference in cashflow for the government will either save them interest on debt or earn interest on surplus funds.
Agree with this. What the govt "loses" is purely the interest on the deferred tax.
Quote:
These are two savings that would be passed on to taxpayers shouldering the burden of carrying property investors losses if negative gearing were not allowed.
In any business, there is only one place that money comes from. The customer. All costs associated with the own-to-rent business along with all profits realised by the operators of the business are ultimately borne by tenants. As many bears are very fond of pointing out, nobody is making out like a bandit in this business, so if you add cost to the equation, it will come out of the pockets of tenants eventually. There is nowhere else for it to come from. To the extent that quarantining losses from rental properties would make a difference (not much in my view), the difference will be felt by tenants.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
What you are saying is that investors won't exist and no properties will be purchased by them if negative gearing didn't exist.
No, I'm not saying that. What a ridiculous claim.
Quote:
recent figures show NG costing the nation around $36b (2011/12)
Where did you pluck that figure from?
Net rental loss in 2011/2012 was $7.8 billion.
It would be much lower than that today due to the drop in interest rates since the 2011/2012 tax year.
In any case, it doesn't actually cost anything - it's just a few billion dollars claimed today rather than claimed a few years later, which is all that would happen if losses had to be quarantined
If you consider recent figures show NG costing the nation around $36b (2011/12) that's lost PAYG and deductions, then it's not costing us $2b pa it's a hell of a lot more.
You are revealing yourself to be an arse and sucker for made up crap written by Catherine Cashmore and her like.
I suggest you examine the origin of your made up $36b (2011/12) figure, determine the correct figure (~$2b in deferred tax), and then return with an apology for being such a sucker for paper selling bear shit. That is if you are at all interested in having any credibility.
I believe deductions alone on interest were $24 billion or roughly 12k per property for the 2011-12 financial year. The other 12b is made up of further deductions such as depreciation and lost PAYG, lost PAYG tax needs to be represented as it is money due to our economy that is denied due to this ridiculous scheme.
I am looking for the abc article that is an accumulative of all costs that outlined the $36b+, but it's not hard to see how this all accumulates far in excess if the rubbish 2-4b you flout regularly.
it's not hard to see how this all accumulates far in excess if the rubbish 2-4b you flout regularly.
Your own article agrees with 'the rubbish 2-4b I flout regularly'
Did you not read the article you posted? Here is a direct quote from it...
'real estate negative gearing costs the Federal Government coffers about $4 billion a year, which might fall to a saving of about $2 billion a year if it were abolished as people would change their behaviour'
And that was based on 2011-12 data when interest rates were higher and hence negative gearing costs were higher than today.
It would be well under the $2-4 billion mark today.
You can go back to sleep now.
$36 billion, LOL. Like a typical bear, you have been totally sucked in by the absolute drivel spouted by the likes of Catherine Cashmore and Macrobusiness.
Your own article agrees with 'the rubbish 2-4b I flout regularly'
Did you not read the article you posted? Here is a direct quote from it...
'real estate negative gearing costs the Federal Government coffers about $4 billion a year, which might fall to a saving of about $2 billion a year if it were abolished as people would change their behaviour'
And that was based on 2011-12 data when interest rates were higher and hence negative gearing costs were higher than today.
It would be well under the $2-4 billion mark today.
You can go back to sleep now.
$36 billion, LOL. Like a typical bear, you have been totally sucked in by the absolute drivel spouted by the likes of Catherine Cashmore and Macrobusiness.
Based in Gratton institutes figures that, like you, state that the total cost is reduced to this amount offset by the revenue they create.
Revenue you all claim wouldn't exist unless NG was around. Wide awake shadow thank you.
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