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The Negative Gearing Thread: RBA Bulletin - Negative Gearing available in many countries
Topic Started: 10 Mar 2011, 12:10 PM (32,793 Views)
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Little positive about negative gearing

Peter Martin

October 6, 2011

"There's got to be a limit - it just can't go on forever" ... David Koch. NEGATIVE gearing was already on the nose when ''Kochie'' delivered his verdict.

Property manager Eddie Kutner of Central Equity Ltd had just finished putting the case for the rule that allows investors to write off losses made on rental properties against other income before selling the property and pocketing a capital gain taxed at only half their marginal rate.

It was "a responsible part of providing accommodation, a very defensible proposition".

David Koch, the finance journalist and Sunrise host, was at the summit as a community representative.

"Negative gearing on an unproductive asset? Does it just go on for time immemorial or is it time to actually put some limits on it - to say, OK for the first five years, but if it's not producing an income after that why are you there?

"It's done purely for the attraction of letting the taxman pay half. I'm not saying get rid of it all together, but there's got to be a limit - it just can't go on forever."

Read more: http://www.smh.com.au/business/little-positive-about-negative-gearing-20111005-1l9qa.html
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Gearing down for more affordable housing

Sarah Toohey

October 11, 2011 - 10:24AM

At last week's Tax Forum, David Koch, once finance reporter, now better known as Sunrise's Kochie, added his voice to the many speaking out against the tax loopholes that distort the property market and push up house prices.

What struck me about Kochie's statement was the example he gave of a TV advertisement that told investors to get into property and ''let the taxman pay half''. Hang on. Who's the tax man? Wayne Swan? No. We're all the tax man. What the ad should have said is invest in property and ''let your fellow Australians pay half''.

Not only are we all the taxman, we all, in one way or another, suffer from the high cost of housing in Australia, driven in part by the tax loopholes around investment housing.

I am sure, that among the 1.6 million taxpayers claiming negative gearing deductions, there are parents with adult children still living at home because they can't afford to move out and there are parents with adult children struggling in the rental market. And I'm sure there are people who would like to buy a home to live in, but can't afford to buy close to their jobs and family, so they have invested instead.

Read more: http://smh.domain.com.au/home-investor-centre/gearing-down-for-more-affordable-housing-20111011-1lisg.html.
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Video - Negative Gearing Pros and Cons: http://tv.afr.com/video/172833?play=1

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Join PricewaterhouseCoopers' Tim Cox, KPMG's Rosheen Garnon, Deloitte's David Pring and Ernst & Young's Alf Capito in a robust discussion on negative gearing and tax treatment of savings.
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No point in property negativity

Anthony Keane
National Features
November 07, 2011 12:00AM

THE following words are not going to be pleasant reading for the 1.7 million Aussie landlords who own negatively-geared investment properties.

You're trying to build your wealth on dubious foundations. Negative gearing is not your friend. Negative gearing should be banned.

But wait. Don't shoot the messenger these are not my words (actually, I'm one of you).

They come from a growing band of critics - ranging from economists and newspaper columnists to property experts and bank bosses - who are questioning negative gearing, where investors claim a tax deduction when their expenses exceed income.

Read more: http://www.news.com.au/money/property/no-point-in-property-negativity/story-e6frfmd0-1226187768438
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Negative gearing: time to rethink your approach

Bina Brown
December 4, 2011

In a rising property market, negative gearing can be a good strategy to build wealth - but watch out when values fall. There are plenty of reasons why Australians love to borrow money to invest in bricks and mortar. Some people think the value of property never goes down; others like the fact you can see and touch it. But, mostly, it is the ability to offset the cost of owning the property - including the interest paid on a loan - against assessable income that makes it particularly attractive.

As long as the loan costs are greater than the rental income, then the Australian Taxation Office allows investors to offset the loss against their income. This strategy, known as negative gearing, is often considered more a tax strategy than an investment one. Since the aim of most investment strategies is to make a profit, investors with negatively geared property either hope that one day the rent covers the loan costs or the capital growth in the property is such that they make a profit when it comes time to sell. As soon as the rent covers the cost of borrowing, it becomes a positively geared property and the income might be subject to tax. Many, however, would say it is better to pay tax on a profit than make a loss.

For most of the 30-or-so years negative gearing has been around, it has been a reasonable strategy based on the capital growth rates of property across the country, says the founder of Smart Property Adviser, Kevin Lee. However, at a time of global economic uncertainty, betting on capital gains from property is a risky and outdated strategy for most people, he says.

Read more: http://www.smh.com.au/money/investing/negative-gearing-time-to-rethink-your-approach-20111203-1oc58.html#ixzz1fi8cvORX
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Strindberg
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For most of the 30-or-so years negative gearing has been around......


Dumb misinformed journalist.

Negative gearing has been around as long as income tax. It has always (apart from 2 years in the 1980s) been a natural feature of the tax system in Australia that aggregated legitimate personal expenses are subtracted from aggregated personal income.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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hoofarted
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Strindberg
6 Dec 2011, 12:09 PM


Dumb misinformed journalist.

Negative gearing has been around as long as income tax. It has always (apart from 2 years in the 1980s) been a natural feature of the tax system in Australia that aggregated legitimate personal expenses are subtracted from aggregated personal income.
Did he tell you something you did not want to hear or does his specification of the duration that NG has been in place negate the entire article? :banned:
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Strindberg
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hoofarted
6 Dec 2011, 01:02 PM
Did he tell you something you did not want to hear or does his specification of the duration that NG has been in place negate the entire article? :banned:
Bina (he/she?) told me that he/she is misinformed.

With regard to the rest of the article they are wrong to imply that capital gains have been needed to justify negative gearing over the last 30 years. A property purchased 30 years ago, initially with negative gearing, for say $40k would now be returning about $20k a year in rent.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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BubbleBoy
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Strindberg
6 Dec 2011, 01:37 PM
Bina (he/she?) told me that he/she is misinformed.

With regard to the rest of the article they are wrong to imply that capital gains have been needed to justify negative gearing over the last 30 years. A property purchased 30 years ago, initially with negative gearing, for say $40k would now be returning about $20k a year in rent.
You didn't just correct his error, you described him as "dumb misinformed". Full of hatred just because of a minor slip up.

Edited by BubbleBoy, 6 Dec 2011, 07:18 PM.
My name is based on a Seinfeld character, not on a belief of a housing bubble.
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Rastus2
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Strindberg
6 Dec 2011, 12:09 PM


Dumb misinformed journalist.

Negative gearing has been around as long as income tax. It has always (apart from 2 years in the 1980s) been a natural feature of the tax system in Australia that aggregated legitimate personal expenses are subtracted from aggregated personal income.


lol, you didn't even get the abuse at the correct person... try reading the story more closely next time.




For most of the 30-or-so years negative gearing has been around, it has been a reasonable strategy based on the capital growth rates of property across the country, says the founder of Smart Property Adviser, Kevin Lee.



http://www.smartpropertyadviser.com.au/

Perhaps you should consider firing some abuse towards the property expert @ smartpropertyadviser ?
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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