Piste Skier, post:
There is provision for claiming a tax deduction for any expense necessarily incurred in generating taxable income. It is established that interest on debt used to purchase/build assets that are intended to generate taxable income is necessarily incurred and therefore deductible against taxable income. This applies to any income producing asset, not just residential or other property.
In my proposal, nothing changes if you stick to or below a residential value - I called it a base residential property value.
To preclude the interest on property investment debts, ie "negative gearing" from this all encompassing provision of the tax act, would require specific legislation that deliberately targets housing investors. Why? What would the purpose be of artificially distorting the market for a single asset class?
As I have mentioned in my original post, a good percentage residential investors - I'm excluding industrial properties - aren't adhering to what was the intent of providing taxpayers assistance in improving the affordable housing stock.
The other benefits is possibly more investing going into outer suburbs and regional areas.
