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Can some fellow ausfags redpill me on 'negative gearing'? To me, it just sounds like taxpayers are paying welfare for wealthy investors who gamble and lose. So why are we being fed this bullshit that negative gearing is good for the average person? If anything, it provides incentives for rich chinese investors to buy up all the houses in the market so ordinary people can't compete.
Is negative gearing good or bad?
Fair game on claiming costs agains passive income. Ppl will pay tax when they sell, so just timing on tax payments.
>>70720490
google.com.au
>>70720490
negative gearing is a tax deduction like any other cost of doing business.
foreign entities pay withholding tax unless they're registered at which point they pay the applicable income tax rate.
the problem with poor people is they spend their cash on shitty consumer items that are not deductible like kfc and xboxes.
>>70720490
Negative gearing in Australia basically refers to how you can make a loss on a property investment over time and claim that against income.
Basically it means that if I had a house that had 30k worth of mortgage to service each year that I rented out for 20k I would be able to claim 10k against my income tax.
It helps people pay for mortgages but it also inflates the cost of housing. A huge amount of negative gearing occurs in the upper middle class, rather than anyone who actually needs it as a tax break.
An argument is used that when it was removed for a few years in the early 80's (from memory) rents rose so removing it now would make rents rise but these isn't statistically sound, primarily because rents only rose in Sydney and Adelaide in that time period.
Apart from adding to the property bubble and making prices rise faster it doesn't impact chinese overseas investors as they don't pay income tax here.
>>70720902
This.
>>70720490
Even bringing in a cap would isolate property as a special snowflake investment structure. All registered businesses use negative gearing at some point. It's standard business procedure.
>>70720969
the bubble you are seeing is driven by two core components.
monetary policy and population.
any taxable entity incurs costs when they go about their business, no one ever enters into a business to make a loss. you'll go broke if you are wealthy or not.
saying negative gearing is bad is like saying textbooks for indian uni students working at 7/11 should not be tax deductible and its the reason uni fees are so high.
it's the easy debt that's causing the problems in education just like housing
>>70722117
It's an issue about the ability to claim against income tax or not though, no one is arguing that losses made on a house shouldn't be able to be claimed against revenue from other houses or other passive income streams.
The ability to claim against income gives greater purchasing power to those with high incomes over those with low incomes when competing in the property market as they have more income to claim. It also makes the re-distributive function of income taxation system less effective as those with money are able to essentially avoid tax.
The idea of negative gearing isn't that bad. The thing that has made it bad is that every Joe Blow decided to become a property investor and bought up all the cheap housing which traditionally is what first home buyers would buy. So instead of paying off a mortgage they now have to rent because everything else in the market is too expensive and over inflated because Joe Blow has 5 investment properties
>>70722594
But the other anon is correct, this is policy based.
If the government gave more incentive to invest in businesses outside passive property investment it would create innovation and employment generation.
Property investment is stale investment driven by record low interest rates.
>>70720490
Don't worry about it, you will never be able to afford a house.
>>70722777
But the fact you can claim losses against income means that there is much less risk.
If you make other investments and lose you can only claim it against capital gains tax in the future, not income.
>>70723026
I think the most important point that anon made though is
>Property investment is stale investment
Property investment doesn't create jobs, innovation, new infrastructure or benefit the broader community. It actually pits us against one another. A negatively geared property is a house that could've been owned by a young family but instead they must rent it. (rent money is basically a waste)
>>70723026
Again that's a problem with policy.
The politicians aren't changing the policy because they all own so many properties
>>70720490
Who /greens/ here?
>>70725733
no one. fuck off melbourne fag
>>70720490
Negative gearing is the biggest upper class welfare scheme currently running in Australia. And there's heaps of them to contend with.
>>70720490
removing it is just a tax grab by the ALP. You can claim deductions with other asset classes as well. In all honesty if they can tax you on profits made it is only fair you can claim deductions just like a business. If they really wanted to address the cost of housing appropriately they need to deregulate land release. Supply of land is the biggest problem we face in Australia, it is heavily regulated.
It is a way of ensuring that you have two classes of people, renters and owners and trying their hardest to make it impossible to leap the gap from one to the other
>>70727278
>Claiming back your own money is welfare
you clearly do not understand how it works and how deductions work. It is the same with every other asset class.
>>70723342
instead that is a completely wrong assertion. It operates exactly the same as investment in equities.Not only is the benefactor the investors who claim it as income it incentivizes investment into the stock of housing.
>>70727532
You offset property losses against your own personal income, thereby reducing your taxable income and the level of tax you pay
It does NOT work the other way, you get to carry cap gains and other profits separate to your personal income.
It is a ridiculous system.
>>70727456
They're not proposing to remove it, just to restrict it to new housing stock. Which makes 100% sense. The only argument of neg gearers is that it makes houses available that wouldn't otherwise be. The reality is the opposite, it puts home ownership in the hands of fewer people, not more.
This would boost construction while allowing first home buyers to actually look at entering the property ladder without cashed-up boomers beating them out every Saturday at the open houses and auctions.
>>70725733
shut the fuck up you bloody poofter
