I have been following this thread with great interest as I have been a property investor for 20 years.
There seems to be a perception that negative gearing is a massive advantage for the investor and only helps the " rich ".
While every little bit helps in terms of tax breaks ,you need to realise that there are a heck of a lot of investors who aren't rich , they are normal everday workers. A lot of these people are investing in property so that they can self fund their retirement , which of course helps take the burden off the taxpayer in the longer term. Also , when they cash out their investment , they're up for cgt.
You also have to remember that in order to get some tax cash back , you have to spend yours first. For every dollar you spend , you might get 20 or 30 cents back. Of course , you could choose to not invest that money and just spend it . That may help the economy depending on what you spend it on but it may also disappear overseas. Property investment helps provide local infrastructure , jobs and lets not forget stamp duty and land tax.
I did a bit of googling regarding the '85 to '87 no ng period . Looks like it didn't go so well hence they brought it back pretty quick. There has been a shortage of house building for many years in Australia which I imagine controls pricing in general . The old supply vs demand scenario. I don't think we need to make it any worse by cancelling ng.
I am a payg employee so I pay a fair bit of tax as I have next to no deductions. A few of my friends who are in small business ( and good on them ) can legally claim all sorts of things on tax that I can't . Cars , power , computers , travel etc . I think if we were going to have a crack at ng , then I think we better have a look at everything else.
Coincidentally , CPA Australia has just released a book about Australia's competitiveness in which it talks about how ordinary our tax system is. There's something like 127 taxes and yet 90% of the revenue comes from about 10 of them.
Yes , I am a property investor . No , I'm not trying to particularly support the property industry . Just trying to add a bit of balance to the discussion .
Generally speaking , I run my portfolio neutrally geared so that they are 'self supporting' in case my income varies. Ironically , I have a margin loan where the interest is tax deductible . Maybe we should have a go at that as well ?
