The stupidity of this policy is that for about $1500.00 on can form a trust and claim all expenses, and you guessed it, the costs are also deductable.

The other fact that flies under the radar is that of the taxes paid by the banks, on the profits they make from charging interest. And considering most properties become positively geared in time, through income growth, that tax paid is dome so without the claims of NG.

For anyone who wants to see negative gearing gone, all I can say is two things.
One, I hope you have your own home and don't rely on rentals, and Two, I hope you own it, or at least almost own it because nobody will know its true value, meaning you may get a margin call from the bank one day. And selling wont be an option, because who in their right mind is going to buy it.

But, the myth being exposed is, if you don't pay more tax than you claim in welfare, you are not subsidizing anything.

Dear rehctub,

Sigh.

We back on negative gearing again?

This was your argument;

“You see the top 10% of individual PAYG earners, 'the rich' as they are known, are the only ones who actually pay more in taxes than they draw in support (welfare) as the remaining 90% draw more out than they put in. So if anything the only ones who are subsidizing the rich are those from the top 10% who don't negative gear. So it's all a big myth.”

Firstly your figures are bunkum. Tell us where you plucked them from and we can have a discussion. Nor can you take it as a blanket rule. 3 out of 5 of my sibling group have not had children nor are they big users of the health system, two of the biggest draws on the taxation system. They are paying a net tax amount and they are certainly not in the top 10%.

But your main complaint seems to be with out progressive taxation system. Look, as a society we rightly decided that the amount of money people earn should be taxed at an inclining rate. It is part of a very worthwhile ethic which says those who earn more should contribute more. Leaving aside the Medicare levy a person on $150,000 pays tax on the first $50,000 at exactly the same rate as a person on $50,000. They are taxed under the same rules.

In Denmark the rates are notably higher but there is a sense of pride in paying them because of the society is delivers; one of the happiest in the world.
http://www.usnews.com/news/best-countries/articles/2016-01-20/why-danes-happily-pay-high-rates-of-taxes

The amount a person pays is the expense of living within a society. That proportion becomes the government's not the person's. The less of that allocated proportion that is paid comes at a cost to our society and impacts the services it provides. Negative gearing diminishes that contribution and especially on existing home provides very little benefit in return.

Dear Hasbeen,

<<Interest is a very large part of the cost of many businesses.>>

Yes, and it is crooked. Borrowing allows people to live beyond their means and bring more children to this world which they cannot afford. It should not be encouraged and rewarded.

<<Virtually no mining would have been possible, without borrowings>>

Because society is addicted and spoiled. If you want to mine, all you should need to start is a $50 shovel.

<<Why should rental housing be different to every other business.>>

It should not. No one should receive a gift (in the form of tax deductions) for borrowing monies that are not theirs while the rest of us who either do not invest or invest our own rightly-earned money, pay our full taxes. This encourages a bad habit, so it should be stopped.

<<The thing you & Mikk are probably really wanting is to quarantine those losses to the rental business. Again this is purely driven by envy of those who won't take the chance of losing the family home to buy a rental property.>>

I cannot speak for Mikk. Let me assure you that I have nothing for or against the rental housing business. As for quarantining, I in fact wrote the opposite. Also, I do not envy for their low morals those who take the chance of losing their family home to buy a rental property: I think they are irresponsible for doing this to their families and also for willing to live on tax-payer money if they in fact end up losing their homes.

Regarding CGT, what's so onerous in a simple table-lookup and multiplication? Even easier with an online calculator. You bought an asset in 19xx for $XXXXXX, sold it in 20yy for $YYYYYY, inflation during that period was zz%, so your earning of (YYYYYY-(XXXXXX*(1+zz/100))) should be taxed like any other income. What asset it happened to be should not matter. I have no idea what envy you are talking about, I only look at the ethical/moral aspects and investigate what needs to be changed in order to make things morally right.

Steel and Yuyutsu, if you take away incentives to invest, people will stop investing, its as simple as night turning into day.

Y, your explanation with regards to calculating CCT is right, however the missing link is the public service, as they are incapable of doing such simple math.

The reason behind the discounted CGT was to encourage the investor to sell the asset, so another could be built, this is the reason you have to reinvest in a similar sector within 12 months to retain the discount.as it was aimed at the housing shortage problem, the problem still exists and this change will be a backward step.

Steel
Visit pretty much any suburb in any city or regional town and you will find a large reduction in rents from older homes to new ones, so if the older ones are no longer available, the cheaper accommodation will dry up. The problem with this policy is that once lived in, the new home will become old and taboo for investors.

The other effected area will be that of whats known as 'upgrades' where the first home becomes a rental when the owners upgrade. That will have a two fold effect, as the first wont be a much needed rental, and the second wont get built.

If you wiah to make changes to NG, limit the number of houses one can gear, or the amount one can gear because that will have a much lesser impact.

Either way I think Shorten is dead in the water so it wont really matter come next week.

rehctub,

".... if you take away incentives to invest, people will stop investing, its as simple as night turning into day."

We've been through all this before...negative gearing is primarily a strategy employed for making a loss so as to minimise one's tax bill.

The End.

ttbn is right. Tax payers should not be subsidising the attempts of others to enrich themselves, nor lock future generations out of the housing market for that matter. I too want to puke when I hear this phrase, “mum and dad investors”.

My brother’s wife’s parents bought their house for them and have just recently bought another house for the child that my brother and his wife haven’t even conceived yet. Let that sink in: someone who does not yet exist owns a house that was purchased by outbidding hard working young couples who just want to own their own home. It’s wrong.

This says more about the state of things than it does about negative gearing being a good thing.