I see this topic has once again raised it's head.

So, my question is, if we do away with NG, where will people live as there will simply be no incentive for investors to buy houses.

So let's say as a result of this change, if it were to happen, the everage home dropped in value by say 20%.

This means a $400K home is now $320K but, the banks would also be less likely to lend the full 80%, with the balance of risk being taken up by mortage insurers, as the true value of the home would have to be proven, so those who can't afford a home at $400K, won't be able to afford one at $320K as the deposit is what kills most buyers, not the loan repayments as such.

One reason why people can buy a home with mortage insurance is because there are buyer (investors) out there and, the lenders know that, should they default and get sold up.

Investors often have several properties, so they can get the money to buy as the risk is spread,which makes the lenders feel comfortable.

Take these out of the equation and I,m not so sure these 5% deposit deals will still be there.

25% of $320K is far greater than 5% of $400K.

At present, landlords ar getting a pretty raw deal.

We have to give two months notice to vacate, whereas a tenant only has to give two weeks.

We have to give two months notice to increase rents and, such increases can be rejected by the authorities as being unjust.

So, if NG is removed, which also means the tax break, why would I invest in a rental?

Persons should decide whether to invest , because they have investigated the investment proposal and decided [ with expert advice , if necessary ] that it is worthwhile , having regard to the soundness of the proposed investment , and not because there will be a tax break available from the investment . Where there is a tax break , the taxpayers are subsidising the investor [ as occurs with negative gearing ] . This amounts to the provision of welfare to a person who already has sufficient resources .

Dear Gods, not this Furphy again?

"So, my question is, if we do away with NG, where will people live as there will simply be no incentive for investors to buy houses."

Let's do away with this rort as soon as possible and see house prices tumble from the subsidised high levels they are at the moment.

This rort is used to buy already existing houses, not to build new stock, in the main.

And let's end it on stocks-shares too.

The rents will tumble with lower house prices.

Those 'investors' who 'care' for renters can invest in new buildings and actually increase the level of housing stock, and do something useful for a change.

While we are at it, capital gains tax on all homes would be a good reform too.

negative gearing is a clever scam
we buy a car or a computer..it looses its value..[tough titties]

you buy a house..you get negative gearing
ie avoid paying tax cause your investment supposedly lost money

but hey you rented yiour mansion to your kids
who pay token rent..[no worries the govt will pay the difference]..lol

ng is a scam
those with their wealth in the family trusts..love it

were making rental for the poor
by propping up capitalists..who need to find ways to steal capital gain

think of a bash man in his grass hut
no rent...cause his grass hut dont got value

but a capitalist builds a grass hut for a tourist..it has value
but is also depreciating..so he avoids tax

if you investers didnt buy
maybe the poor could buy

mate your so predictable
cut wages..give you capital gains
and then you negative gear..to avoid paying more tazx on your income

income is money made from no value adding
you shouldnt be taxing wage..cause wage isnt income

but ya mug workers dont know the difference
they could be renting each others house's..to each other
at token rent..

then negative gearing the 'value adding'..
to make each others houses
thus their own..better

plus negative gear them
cause thats what the rich do..

stop giving govt money to capitalists

My financial advisor said never finance several proporties through the same institution,that way if anything goes pear shaped, the other proporties are protected. But what he DIDN'T tell me that in today's financial debarkle, I shouldn't by NEW [ or build ]unless you looking for the long haul in value. We learned pretty quickly that although maintenance considerations help in off set for negative gearing, all the smart investors bought established homes and wore what little maintenance they had to do - thus making the proporty positive geared.
At worst, if you made a yearly loss it was deductable anyway. At best, you made some money even though you were taxed on it - and it's value increased faster than a new house because people just couldn't afford new to buy when you wanted to unload the proporty. Although the established house was cheaper to buy [ for unloading by you ] it's proportional value in profit to you made it a good move. You MADE money in any proportion instead of loosing money because you had to drop the price of a NEW house in order to find a buyer who could afford it.

Just another tax rort. Leave the houses to the people that want to bye them to live in. It is predominately the cheaper homes that investors bye, limiting the market.

I'm not personally involved in the property market as a business. But it always puzzles me why this topic keeps raising its head. And also, why the phrase "negative gearing" is used - most often pejoratively - in lieu of "business expenses".

If I run a business in which I invest in an asset, I am allowed to do two things: I am permitted to depreciate or amortise; and I am allowed to record in the business' P&L the legitimate expenses incurred in the maintenance of that asset.

Why is it considered differently, if my business is property?

Seriously. Why?

But a bigger 'why' is why should any business expense be a legal tax rort when the cost of being an employee is not?

TBC, I'm not so sure that rents will fumble as you say.

Hoses back around 2000 were very affordable and, that was when the grant came out,yet many still did not enter the market.

What makes you so sure they will if prices fall and, they can't really tumble as you say, otherwise there would be a complete financial meltdown.

OUG, you buy a car or a computer and use it for business you get the same tax breaks, they are just under a different banner.

Pepper,as a normal procedure when borrowing fo another house, the financier insists on a personal guarantee, therefore, your assetts are at risk no matter who lends you th money, unless you have the correct structure in place and they cost a small; fortune.

579, investors often buy new just for the depreciation benefits.

If people can't buy a house with $21K thrown in TAX FREE, they most likely never will.

Pericles, I think the term negative gearing is used because it describes the negative amount needed to supplement the holding costs of the property.

TBC, to answer your question about business expenses, can you really imagine anyone becoming an employer if they have to not only take the risks, but also have no tax breaks for doin so.

Does the term, sitting on your hands, come to mind.

I can assure you all that I, as an investor would not acquire any more investment properties if not for NG, and I think I speak for the vast majority of investors here.

Having said that, I do not have negatively geared properties, but I did some years ago.

Some of you suggest that NG doesn't apply to new properties in the main, however, what do you think the sellers of these older properties buy when they re enter the market, as most do.

If we remove NG the building industry would have a major set back, if not a collapse and the lenders would tighten up thier lending, then what!

Yes, well that all goes to show what a total scam 'investing' really is, paid for by others, the old style privatising the profits and socialising the losses and risks.

Really, if you want to be a capitalist, stand on your own feet and stop hiding behind subsidies.

Not a house owner Blue? For many of us older folk, the home is our superannuation policy, there wasn't much going a while back.

It would be quite disastrous for many if housing prices were to fall much, so many are all ready teetering on zero or negative equity, they won't have to fall too much to generate a complete break down of the financial system.

The whole thing would work so much better if we could stop state governments profiteering in the release & sale of new land, & ridiculous stamp duties on everything to do with housing.

Careful has been, you may hit a nerve as it sure is easy to spot the under achiever on this site. They hate anyone who dares to take risks.

As for stamp duty, I heard just the other day that the QLD gov is abolishing SD on investment properties and increasing the tax on home owner purchases, as a trade off for the very unfair ambulance levy.

As if potential owners are not struggling enough, they go and slap another 16 grand on the $400K home.

Economic vandals these labor governments!

Negative gearing as is speculation investment are just two of the many cancers in economy.
The banks are the AIDS of economy. The Public Service is the Flu of economy.

Thanks for your concern Hasbeen. I built my own house and paid for it as I went. All paid for long ago.

'Taking risks' is not so very risk taking when the state constantly pays out failed capitalists, subsidises them with tax rorts and an almost complete failure to police the most obvious rorters, while also paying all those costs that producers fail to build into their product costs, so passing them on to the public.

As for the ambulance cover going from power bills, about time. Where does the money for the police force come from? Or our totally failed armed forces, who cost us all billions every year in failed equipment purchases?

No doubt rehctub, you dream whistfully of the days of Ambo Boards, where old ducks sold raffle tickets and Lammingtons to fund the new Dennis/F250 ambo, and the ambulance driver was just that, a driver?

Expectations of skilled staff required 'funding', and it does not come from 'old ducks'.

As for the home-being-super, where will you live when you cash in your super? Capital gains, death duties, land taxes, these are not unusual, even Thatcher kept death duties and so is Cameron.

Of course, if the wealthy paid taxes, then we could all pay less, or pay for those services we all benefit from as a community.

Blue, I was an ambulance subscriber all my life.

My beef has always been in the way some of us are charged twice, or more.

I pay for my own home, a unit and two businesses, Why?

As for the wealthy paying tax, I'm with you.

A transaction tax is what I feel needs consideration as nobody can be over charged or, escape paying tax at all, unless of cause they live unde a rock and are totally self sufficient who, don't matter anyway.