Majority of property investors are now in a situation whereby the marginal tax rate is such that ng is of little value.
The super earners are the ones benefitting the most.
Anyone buying real estate as an investor who is reliant on ng and is not buying to have a positive cash flow is looking for trouble if they are overleveraged. A lot of property investors now have their properties giving returns that render them taxable and a good earner for the ATO. Plus the cap gains they get albeit with a discounted portion.
You will not kill the perceived ill tax effects if you don't re assess the effects of depreciation as well and deductions for maintenance. If you abolish ng - will that then get rid of the deductions to maintain the property?
Will that do away with the cost of the rates and taxes as a deduction? Will it only apply to the interest component that exceeds the receipts? Real can of worms here and not as simple as it seems . How will they justify hitting real estate this way and not exploration in mining, biotech startups, business in general? etc etc.
Fiddle with this without forethought and major reform and the revenue streams for all 3 tiers of govt will be smashed let alone the voter backlash .
Now imagine you are a landlord and you have negatively geared and suddenly you can not claim for maintenance/rates etc - that is where the landlord with the help of managing agents will push up rents to cover these costs from the tenants. In the rates there are provisions for fire levies, costs for roads etc which burden is carried by landlords and should actually be apportioned to the entire populace - thus expect rents to skyrocket as the owners largesse is only there because as with any business they are deductible and will not be if diallowed.
Having said that to run a business I would agree that the expenses need to be written off against the income attributable to that business and not the investors private income. But then with the new lower marginal tax rates it will have little impact in my opinion.Only the super earners , many of whom are pollies who own IP'swill stand to pay more tax. There is little will to change this setup I reckon.
