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The Forum > Article Comments > Removing negative gearing would have little effect on rents > Comments

Removing negative gearing would have little effect on rents : Comments

By Philip Soos, published 2/1/2013

Yates shows that the relatively wealthy tend to benefit more from negative gearing than those within the lowest or middle income quintiles.

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Care to sell us on the benefits of the National Rental Affordability Scheme (NRAS) and the Commonwealth Rent Assistance (CRA) program ?

Or are these schemes just so government can meddle further, while saving themselves expenditures they should be making ?

The National Rental Affordability Scheme (NRAS) promotes purchases to receive ~$9,981 implied as tax free incentives, every year for 10 years, from government corporate entities, for new dwellings on condition they rented to low- and moderate-income households at 20% below market rates.

http://en.wikipedia.org/wiki/National_Rental_Affordability_Scheme

"... Dwellings will be rented to ‘eligible tenants’. Dwellings will be rented for a period of 10 years. Dwellings will be rented at a rate that is at least 20% below market rate. Dwellings must either: not have been lived in as a residence or not have been lived in as a residence since having been made fit for occupancy where otherwise the dwelling was recognised as being uninhabitable or if it has been converted to create additional residences, then a part of the dwelling or building that is capable of being lived in as a separate residence must not have been lived in as a separate residence. Dwellings will comply with State, Territory and Local Government planning and building codes and requirements..."

This is government reducing their commitments for public housing as landlords, to house mostly semi-government employees.

Landlord investors risk dealing with governments, who change the rules wherever, whenever it suits them.

Pay more attention to our corporate landowners permitted by Commonwealth's ALR(NT) to ignore tenancy laws, refuse leases to tenants and residents so remain dependent upon public funds to construct housing, as no leases means no private investments.
Posted by polpak, Wednesday, 2 January 2013 9:12:42 AM
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Whether through income tax or capital gains tax all investment cost deductions are ultimately allowed and realized. Gov't can not escape this so why remove annualized NG?

Why remove NG on housing while it is maintained for other investment classes, such as a share portfolio bought from borrowings?

On another matter, why is state stamp duty on selling shares nil but on a property purchase it's absolutely massive? Removing the GST from food was a smokescreen for this state skullduggery.
Posted by Luciferase, Wednesday, 2 January 2013 10:04:39 AM
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Concur completely with the Author.
Rents are governed by demand and little else. i.e., we just completed a family reunion/holiday, in an average family/pet friendly, 5 Brm, 3 Bthrm, seaside home.
Around 3.5 hours north, given the further away from a major area, we seemed to go, the less the rent was!
Even so, the $2,000.00 a week, wasn't exactly cheap!
However, divided between 8 adults and a couple of, [are we there yet,] juveniles, not too bad, and beat the hell out of charge like wounded bulls, hotels or motels!
Jettisoning negative gearing, [welfare for very rich coalition voters,] would add as much as 10 billion to the budget bottom line, and perhaps even create a sizable surplus.
And indeed, add immensely to Labour's growing worldwide reputation, as much better economic managers, without harming them one whit, in the only poll that actually counts!
And one trending towards a very closely run race!
Where economic credentials, could decide, who we trust with our economy?
Say what you will; [gossip, rumour, sleaze, muck rake,] at the end of the day, its still the hip pocket, or the economy stupid, that ultimately decide election outcomes!
If lay-a-bout lazy Landlords want to write of some of their tax liability, then schemes like NRAS still beckon; or indeed, purpose built seaside holiday homes.
Lets see, block of elevated land, 50-70 grand, really nice house built from the ground up, replete with pool, a bore and solar system, 150-170 grand. Only a fool with money burning a hole in a pocket would pay more, for land that could be inundated, before it's inherited!?
50-70% occupancy, times $2,000.00. Around 50-70 grand a year!
And an exponentially increasing return, over the life of the property, which could still appreciate by around 4% per?
Seen the way places like Hervey Bay are growing?
Who needs negative gearing?
Rhrosty.
Posted by Rhrosty, Wednesday, 2 January 2013 10:24:13 AM
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In my last post, last paragraph I meant share purchases, not sales, sorry.

Rhrosty: "If lay-a-bout lazy Landlords want to write of some of their tax liability....."

You refer to myself, who is employed full-time or I'd have no income to negatively gear against.

As I pointed out in my last post, Whether it is via income tax deductions or capital gains tax deductions, all holding costs, including interest paid, must ultimately be allowed so Gov't will not gain any of the billions you imagine. NG simply allows interest deductions to be annualized. Nobody wins, it's an illusion.

Housing is a dirty, hands on investment (ever had a bad tenant?). Making it even less attractive would leave Gov't to pick up the ugly pieces, as Paul Keating had the sense to understand when reinstating NG.

Your holiday house experience is irrelevant as owners simply have less to negatively gear or shift into profit taxable at their marginal income tax rate. In a competitive market they charge what gives them optimal custom/return.
Posted by Luciferase, Wednesday, 2 January 2013 11:16:04 AM
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Hay Phil, tell me more about this $45 billion tax benefit extended to owner occupiers. I've been one of them for years & never seen a cent. Where do I apply?

Otherwise mate, I must say if this is an example of your comparative analysis, you might have to wait a bit for that doctorate. Of course that is if it requires more than an application, with 3 corn flakes packet tops enclosed to qualify.

Mostly all I can find is appeals to authority, & a pile of figures, apparently plucked from thin air. Do you really expect any thinking person to take as gospel a study commissioned by the Brotherhood of St Laurence.

I'm afraid all I can find here is a political rant, of little value. You'll have to do a lot better, with some convincing facts if you want to be taken seriously.

Incidental, I don't, & never ever would, own a domestic rental property. I am not masochist enough for that.
Posted by Hasbeen, Wednesday, 2 January 2013 11:55:48 AM
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you have missed out on the mentality of the investor.

when Tom Uren as minister in the ACT brought in no rent rise for one year .a lot of investors sold out the rest had to factor in the possibility of interest rise and geared their rents accordingly . the shortage and cost of rent-able properties took 3 years to over come after he left

as an owner i am willing to pay capital gain when i sell.but consider neg.gearing makes it worth while to get into this market .take it away .and i will shift my capital

ben
Posted by ben gershon, Wednesday, 2 January 2013 1:58:34 PM
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