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The Forum > Article Comments > Kohler's mistakes underline why negative gearing is threatened > Comments

Kohler's mistakes underline why negative gearing is threatened : Comments

By Graham Young, published 5/4/2016

Alan Kohler is a great c.ommentator but his analysis of negative gearing and the ABCC commit fundamental errors

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Housing in Australia is very affordable if you ignore three or four big capitals. I think the answer is to slow grown in these areas and increase growth else where.
The ability and/or willingness for Government to play a nation building role however is zero.

The only other observation I'll make is there seems to a strange thing that happens with housing. A lot of free market capitalist suddenly sing from a different song sheet when there is any hint of house prices falling.
Posted by Cobber the hound, Tuesday, 5 April 2016 8:59:24 AM
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A good comment, Graham.
I suggest that the term "negative gearing" over time has developed a suggestion of craftiness, with the word "gearing" coming to mean "manipulation", and like many other populist terms, it has adopted a changed meaning.
You point out rightly that it's just a means to offset a loss-making part of the way you gain income.
A simplistic example would be during shopping - if you buy four tins of food but find you can only afford two, then you deduct two from your shopping basket.
Alan Kohler is talented and knowledgeable but perhaps a little too apt to use fashionable language.
Posted by Ponder, Tuesday, 5 April 2016 9:04:35 AM
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Graham: I believe any progressive conservative worthy of that nomenclature, would never ever agree with your self evidently, selfish, self serving position?

One can and does agree however, we need to keep negative gearing, but only outside the residential housing market, where this tax avoiding instrument belongs and would increase business investment?

[Think outside the bricks and mortar mindset at more lucrative over time, alternative carbon free or carbon neutral energy, electric cars, (test drive the new more affordable Tesla and then tell me I'm wrong) battery walls and attendant lithium mining? And right here in Oz.]

Moreover tax can and does impact on the cost of housing, particularly where the measure is frontloaded well before an abode is occupied?Stamp duty and a cascading GST, among others; and should be replaced by a back end capital gains tax as would apply to any other investment? Not that I see it as such!

From time immemorial, housing/shelter has been seen as a essential, not an investment per se! And there are plenty of places to invest in without the housing market being seen as such?

Moreover, under resourced banks are now too heavily reliant on the housing mortgage market, and many would simply go belly up if the ass were to fall out of the housing market and threatens due to, as noted, emerging oversupply?

Even so, have no prob with the self starters, buying a do'er upper, and investing their own blood, sweat and tears into it and a deserved reasonable return. A significant part of which would be the rent they save in the interim, if they also lived in it!

Removing negative gearing and the ubiquitous foreign investor from the established market is a good move that may see some increased demand in new estates?

For mine the only plan that addresses most of what is wrong with the housing market and affordability, would be remediated with planned and actuated decentralisation!? Which would be accompanied by myriad non residential investment opportunities!? i.e. New industrial estates and CBD's!?
Rhrosty.
Posted by Rhrosty, Tuesday, 5 April 2016 9:37:43 AM
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In the past banks have been lending on very high loan to valuation ratios. This means banks can get very exposed in a housing downturn.
For financial prudence there should be a limit to LTV fpr investor housing above which there is no tax offset.
People invest in housing because of the guaranteed growth in demand due to our high immigration policy. Time it was slashed
Posted by Outrider, Tuesday, 5 April 2016 10:17:06 AM
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want to lower house prices?

get rid of the 40% government taxes/levies on new home builds.
Posted by kirby483, Tuesday, 5 April 2016 11:07:41 AM
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Cobber the Hound has a point. I was speaking to someone the other day who wanted to move to the city from the country, but prices in the country were too low to enable him to sell his place and buy in the city. Country towns are dying, so yes, lets have some growth in regional areas and make those areas more attractive for immigrants and sea-changers.

In the meantime, the housing industry is the most pampered in the country, and cities are being made unlivable by by increasing populations, made up mostly of immigrants we do not need.
Posted by ttbn, Tuesday, 5 April 2016 11:30:15 AM
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