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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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as i have the ability to look after myself and my family
ben gershon,
I envy you having that ability. Being self employed without having to resort to exploit tax loopholes is indeed rare.
Posted by individual, Friday, 4 January 2013 6:04:15 PM
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Indy: "....without having to resort to exploit tax loopholes..."

Negative gearing is no more a "loophole" than is not reaching the base threshold income to pay tax.

As Bazz points out, owning a rental property is a business and all businesses are entitled to deduct expenses, including interest paid to own investments.

By the time the house is sold, the owner has come out ahead or behind based on capital value gained or lost and income earned or lost after taking all deductions into account, including interest.

Why shouldn't interest deductions come into the calculation and why is this some dirty (implied) exploitation of a "loophole"? A loophole is unintended by legislators. Legislation permits negative gearing.

You seem envious of something you don't to bother to understand, Indy.
Posted by Luciferase, Friday, 4 January 2013 7:51:19 PM
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businesses are entitled to deduct expenses, including interest paid to own investments.
Luciferase,
Believe me I do understand, I just don't happen to like it, too many loopholes for the dishonest to exploit. It was after all designed by the greedy for the greedy & it's gradually coming up to the proverbial brick wall.
There wouldn't be half the wealthy if a fair system were in place and, the planet would be less polluted.
All this financial crises thing & fiscal cliff waffle has sfa to do with providing services but everything with manipulation to favour the greedy ?
Posted by individual, Friday, 4 January 2013 9:08:20 PM
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If your concern is wealthy people it would only be the high risk developers who rely on change of land use who stand to make a better than average profit. However many developers have gone to the wall trying to leap through bureaucratic hoops for years, or from relying on firm ministerial promises for rail, roads and so on.

Many of the stories about windfall profits from residential property are decades old and when run down were likely myths back then. Residential property tracks behind inflation for years, sometimes over-corrects for a short time and then returns to the doldrums for years. Like shares some think they can outsmart the market and a few do, but many more go away with a sad and costly experience.

If you look into claimed large profits from holding property for many years it is very unusual for a residential block to do better than inflation and the owner has rarely factored in all of the costs. Then 50% of the 'profit' is taxed. It is a form of compulsory saving but one that guarantees lesser returns than other less worrying and more liquid options.

Hold the property long enough and the government will require you to sell it to pay for your nursing home.

The present government continues to flirt with applying capital gains tax to the principle place of residence.
Posted by onthebeach, Friday, 4 January 2013 10:08:09 PM
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'principal' not 'principle'
Posted by onthebeach, Friday, 4 January 2013 10:24:42 PM
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Hold the property long enough and the government will require you to sell it to pay for your nursing home.
onthebeach,
isn't that what accumulating wealth is all about, so you got enough for the rest of your life instead of everyone else having to pay for you ?
Posted by individual, Saturday, 5 January 2013 12:39:55 PM
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