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Is negative gearing worsening housing affordability?

Discussion in 'Real Estate' started by Simon Hampel, 4th Mar, 2008.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

    9th Jun, 2005
    Sydney, Australia
    Last edited: 17th Sep, 2016
  2. crc_error

    crc_error The Rule of 72

    1st May, 2007
    Melbourne, VIC
    its got nothing to do with the tax system, its all to do with supply and demand.

    Increase supply, ie approve more medium density development, and rezone more land to allow new subdivisions to take place.

    And reduce stamp duty back to where it was 5 years ago.. $20,000 for stamp duty will all but kill any opportunity for new people trying to get into the market. Its a joke to have such a tax burdon in trying to sell a used property.
  3. D&K

    D&K Well-Known Member

    14th Nov, 2005
    I agree with CRC on this one. Negative gearing can't be too bad if Kevin07 is looking at even more tax concessions (seem to be aimed at residential property trusts) to provide more affordable rental properties. It's obviosuly not the tax system that's the issue.

  4. Jacque

    Jacque Team InvestEd

    16th Jun, 2005
    State govts rely on private investors to provide rental housing for which they would ultimately be responsible for, if no one bought IP's.
    If the current tax breaks (ie: neg gearing, cap gains concessions) were taken away, the incentive for investors wouldn't be worthwhile, in many cases, to substantiate the cash losses currently borne by those holding investment property. There has to be a reward somewhere along the line, especially given the huge entry and exit costs associated with property overall.
    The govt has tried before (and failed) to eliminate negative gearing but instead found itself with a looming public housing shortage: a sector which relies largely on the private sector to subsidize the amount of accommodation needed.

    As for reductions in stamp duty, this won't assist first home buyers too much (as they already receive concessions) but will help 2nd and 3rd home buyers as well as investors - I can guarantee, though, that I'll eat my hat before stamp duty is seriously reduced (and I'm not talking about a piddly 0.1% reduction but something decent like a capped rate)- those coffers are just way too large for state govts to give up!!