Dear rehctub,

I understand now where an obvious misconception has warped your thinking.

You have been banging on about only 10% of the buyers will want houses that can't be negatively geared. Kirby483 has been at it to;

“So, let's say, the house becomes an old home when you sell it. So, you advertise to sell it, but no investor will want to buy it (as he can't get any neg gearing advantage) so the only people who might buy it are 10% of the population (first home buyers) which means you cant sell it for a profit (or very little).”

You both need to realise that first-home buyers and other owner occupiers still make up the majority of residential house purchasers for whom negative gearing is not a consideration. The proportion of investors has been steadily increasing but is still in the minority. There will not be the calamitous crash of the market you two are chattering on about, more a slight softening which if it improves affordability will be a plus.

Just a note, the highest rental returns are at the top and bottom price range. This has held true for more than a decade. We don't negatively gear any of the rental properties but we have quite a few friends who have bought in the middle and are having to do so. I am convinced it is almost a status thing. Even when they are shown that two cheaper properties, instead of the single one they are purchasing, will give them 50% greater return they still opt for the more expensive option. That is their call but I do get cranky with the thought the rest of us are having to subsidise their decision.

"You both need to realise that first-home buyers and other owner occupiers still make up the majority of residential house purchasers for whom negative gearing is not a consideration. The proportion of investors has been steadily increasing but is still in the minority."

So why all the excitement about investors? Owner occupiers predict price rises based on supply and demand and enter the market for the same reason as investors, to come out ahead. So who is responsible for the "affordability crisis" in Sydney and Melbourne?

It's always been about supply and demand. You still duck the question why Perth, or Hobart haven't followed Sydney and Melbourne markets despite those markets having investors and owner occupiers vying for stock and NG and CGT applying just the same. Why? Because it doesn't fit the electioneering narrative.

What started out as an "affordability crisis" turned into a class war and a refusal to see the zero sum game that NG is in relation to the total tax take ultimately reaped by gov't. As I said, NG is just the time-shifting of losses. The rich could otherwise form trusts or companies and pay tax at lower than their marginal rates, carrying losses forward against future profits.

It is CGT concession Labor should target as well as inheritance/death taxes. The whole NG thing is just a confection of the left. It it had any leftist balls at all Labor would champion these generational causes instead of trying to slip into gov't as the "nice" version of the Liberal Party.

What a pack of soft-cocks.

Luc, in my previous post that you replied to, I clearly said forming a trust gets the benefits of negative gearing, I did not say it was negative gearing. There is a difference.

As for inheritance tax, i'm kind of with you on that one as I feel a direct family member should be able to inherit say $500,000 tax free, then the balance be taxed.

However, if the asset in the estate is held in some form of tax minimisation engine, eg trust, then the entire amount should be taxed as the tax subsidies have already been taken up so its only fair that this be returned.

Very few like this idea but hey, very few tax ideas are popular.

Negative gearing means that the taxpayer is effectively subsidising the cost of interest payments on a personal investment loan without gaining any subsequent financial advantage.

It's almost like somebody buying lottery tickets with somebody else's money but not sharing any winnings.

It costs a certain amount to run a country. If somebody pays less tax then somebody else has to pay more to make up for it elsewhere.

It was introduced long ago to create more new housing stock but has turned into nothing but a tax rort and almost every other country seems to manage quite well without it.

rache, I hope neither your self, your family members, or your friends are renters, because if they are, chances are negative gearing has helped make those rents more affordable.

By all means put a cap on NG, or even a ruling that means the asset must return to profit after say ten years, but to simply remove it will hurt those can least afford it, the renters of older, generally cheaper, housing.

"....but to simply remove it will hurt those can least afford it, the renters of older, generally cheaper, housing."

Pull the other one, rehctub.

I've never seen you give a toss about "those that can least afford it".

You're normally putting the boot into them on this forum.

Why don't you fess up and admit you're all in favour of the tax payer subsidising the investment decisions of some people - but not for providing a healthy social democracy in general?