Australian Housing Affordability Discussion

[dajop]

Even without negative gearing, you can still deduct the expenses from the rent you earn, and if they exceed the rent, you will be making a loss on the property. The difference if negative gearing is abolished, is that you wouldn't be able to claim a deduction for this loss from your other sources of income.

Perhaps to illustrate this some more, if you earn $15000 in rent, but have $25000 in expenses you are losing $10,000 a year. With negative gearing, you effectively end up losing less than this - $5100 loss if you net income > $180000 per annum, $6100 loss if your net income is between $80-$180K, $6550 loss if your income is in the $37-$80 k bracket ... Of course people hope to make up these losses through capital gains.

 

[JohnK]

Can't help but think a measured gradual retreat from negative gearing could be helpful in the long term. But the timeframes involved to a "measured" retreat would be way too long for the political cycle.

Obviously I don't think abolishing negative gearing would be helpful in any way shape or form.

All my properties are making a profit. Have been for a long time. You can't expect me to pay tax on profitable rent and not be able to claim a loss off my salary. That's having a laugh. I wouldn't invest in property. It's that simple. And I wouldn't have saved for my retirement.

People don't understand negative gearing. Think it's there to rort the system. Rubbish. It is there to encourage investors. Nothing to do with increasing property prices. Thank foreign property buyers for that one.

Anyway as I mentioned in other threads it's time for me to get out of property, squander my money wisely and then expect a handout at 65. Much better that way isn't it?

 

[ComeFlyWithMe]

Housing affordability in Australia comes down to one thing: supply.

 

[dajop]

All my properties are making a profit. Have been for a long time. You can't expect me to pay tax on profitable rent and not be able to claim a loss off my salary.

If you are making a profit on all of your properties, you are not negatively gearing. How many years did you sustain losses for, before properties became profitable?

 

[JohnK]

If you are making a profit on all of your properties, you are not negatively gearing.

I was negatively geared in the first few years. Needed negative gearing in place to secure my retirement. Otherwise it makes no sense to invest in property.

 

[dajop]

I was negatively geared in the first few years. Needed negative gearing in place to secure my retirement. Otherwise it makes no sense to invest in property.

Can't help but think though, if there wasn't negative gearing, there wouldn't be as much speculation, property prices would be lower so people would lose less anyway, so would still invest ... but I guess now that we have it, property prices are high, so people need that incentive to invest, so we're stuck with it.

If negative gearing didn't exist on established housing would you have still invested - in new housing stock only? Or looked at other sources of saving for retirement?

 

[JohnK]

If negative gearing didn't exist on established housing would you have still invested - in new housing stock only? Or looked at other sources of saving for retirement?

Not interested in investing in new houses.

Who knows what I would have done had there not been negative gearing. Maybe I would have kept it in term deposits. Not a fan of superannuation or managed investments. Hate dealing with middle men with no consideration for investor.

I have been at looking at property prices away from Sydney. Coffs Harbour, Port Macquarie, Wagga etc. Need ~$350,000 for half decent unit/town house. No thanks.

 

[dajop]

Not interested in investing in new houses.

This is the view of many I believe. Which is a view that is used by those advocating against negative gearing on existing properties -that encourages investment in non-productive assets. Great for the wealth of individuals, but perhaps less so for the economy as a whole.

 

[seanpodge]

Would be better if CGT was fixed back to the old system of inflation only concession rather than 50% discounts. The real rocketing up of house prices, along with the massive increases in declared losses on investment properties really kicks off from that change by Costello. Make some losses covered by negative gearing and then sell up and only pay tax on half of the profit. With government backed rorts like that, people looking to buy houses for the purpose of shelter (how quaint!) don't have a chance.

 

[JohnK]

Would be better if CGT was fixed back to the old system of inflation only concession rather than 50% discounts. The real rocketing up of house prices, along with the massive increases in declared losses on investment properties really kicks off from that change by Costello. Make some losses covered by negative gearing and then sell up and only pay tax on half of the profit. With government backed rorts like that, people looking to buy houses for the purpose of shelter (how quaint!) don't have a chance.

I don't know what the old capital gain tax was but if it means me paying more than 25% capital gain tax on profit then I am extremely uncomfortable. This is my retirement income. I am retiring in 3 or 4 years time and ai don't want to pay ~$400,000 capital gains tax instead of ~$200,000. I owe the government nothing. Owe the bludgers nothing.

Hope any change is not retrospective.

 

[whatmeworry]

I know their has been a lot of discussion about how hard it is to buy a home these days but our PM has a couple of tips on buying a home.

Malcolm Turnbull’s 5 Tips For Owning Your Own Home – The Shovel

 

[Orca]

I know their has been a of lot discussion about how hard it is to buy a home these days but our PM has a couple of tips on buying a home.

Malcolm Turnbull’s 5 Tips For Owning Your Own Home – The Shovel

Haha that's hilarious. L

 

[whatmeworry]

Malcolm Turnbull praises Sydney family for buying their one old daughter a home using negative gearing.

But it’s what Mr Turnbull said next which has left some aspiring homeowners cold: The Prime Minister noted that Mr Mignacca had bought the property “in order to buy a place for his little daughter Adison who we just met who is nearly one.”
Wait, what?
The concept of a one-year-old owning property while many other Australians struggle to buy their first home has instead focused attention on how unfair the housing market is. Those on social media described the example as “embarrassing” and “out of touch”.

Negative gearing: Malcolm Turnbull and the one-year-old baby with a house

Then later jokes wealthy parents should buy their kids homes.

On Wednesday, you told “wealthy” ABC radio host Jon Faine he should “shell out” if his children struggled to afford houses.

Why we aren’t laughing at your house prices joke, PM | The New Daily

 

[Foreigner]

Somewhat OT because this story relates to a man in Indiana, USA. He took the For Sale sign down and moved into a home he had made an offer for:

http://www.domain.com.au/news/man-c...o-home-he-didnt-actually-buy-20160508-gop3h2/

 

[earlyriser]

Election 2016: Reserve Bank worried about negative gearing, capital gains tax concessions

 

[whatmeworry]

RBA memo from 2014, indicating RBA worried about Negative gearing.

The Reserve Bank has expressed concern about negative gearing and the tax concession for capital gains, saying any change that discouraged negative gearing might be "a good thing" from a financial stability perspective.

Any change which discourages negative gearing may be a good thing from a financial stability perspective.
Reserve Bank memo released under freedom of information​

Labor has come under sustained attack from the Coalition for promising sweeping changes to Australia's negative gearing and capital gains tax regime to save $32 billion over 10 years.

Read more: Election 2016: Reserve Bank worried about negative gearing, capital gains tax concessions
​

The memo is a "Q&A" brief dated December 2014, meaning it was written before Labor announced its policy to wind back negative gearing and before the government pledged to continue it.

Illustration: Ron Tandberg

Since the December 2014 memo Sydney house prices have climbed a further 11 per cent. Loans to investors account for 46 per cent of all money lent for housing.

Read more: Election 2016: Reserve Bank worried about negative gearing, capital gains tax concessions
​

 

[ComeFlyWithMe]

I invest in property among other things. The removal of negative gearing will not stop me buying more property. It will stop me giving tenants a generous rental subsidy however, and I'm sure the rest of the market will do the same. This will further exacerbate the problem as increased rents mean less savings for would-be buyers.
While first home buyers unrealistically want blue chip inner city properties, they can't afford them and neither could I when I started.
I'm quite sick of hearing stories of people my age (mid-30's) who whinge about the property market but have no savings and squander all of their income on useless stuff, alcohol and even sometimes drugs.
I received nothing from my parents, no guarantors, no cash, nothing. I worked hard and saved like hell. I gave up a lot of things, but you know what? It was worth it.
Yes the average house is a higher multiplier of average income than it used to be. Interest rates used to be 18% too. So it's never been easy.
There are bargains to be had, but they don't meet the requirements of the entitlement generation, so they'll continue to whine.
Oh and by the way, what's wrong with renting? Society has such a bad stigma against renters. Most Europeans rent. Works for them.

 

[whatmeworry]

I invest in property among other things. The removal of negative gearing will not stop me buying more property. It will stop me giving tenants a generous rental subsidy however, and I'm sure the rest of the market will do the same. This will further exacerbate the problem as increased rents mean less savings for would-be buyers.
While first home buyers unrealistically want blue chip inner city properties, they can't afford them and neither could I when I started.
I'm quite sick of hearing stories of people my age (mid-30's) who whinge about the property market but have no savings and squander all of their income on useless stuff, alcohol and even sometimes drugs.
I received nothing from my parents, no guarantors, no cash, nothing. I worked hard and saved like hell. I gave up a lot of things, but you know what? It was worth it.
Yes the average house is a higher multiplier of average income than it used to be. Interest rates used to be 18% too. So it's never been easy.
There are bargains to be had, but they don't meet the requirements of the entitlement generation, so they'll continue to whine.
Oh and by the way, what's wrong with renting? Society has such a bad stigma against renters. Most Europeans rent. Works for them.

The Australian Dream is to own a home, not own 50 homes with negative gearing.

 

[Moindardt]

The Australian Dream is to own a home, not own 50 homes with negative gearing.

Anyone can own a home with very little effort. Only problem is you want one on the harbour and everyone else to pay for it. People should try earning something themselves instead walking around with their hand out all the time.

 

[ComeFlyWithMe]

The Australian Dream is to own a home, not own 50 homes with negative gearing.

Actually my dream is to own 50 homes and have positive gearing.