For First Home Buyers

Many first home buyers think that if the proposal to abolish negative gearing on existing property was enacted, they’d be better off. Many have said that they believe they’d finally get the chance their parents had, to buy a decent home close to the city.

This belief is simply not true and here’s why;

The main barrier to affordability for young people today is not actually the purchase price. It’s in getting together the upfront deposit of 20% (many lenders won’t lend more than 80% due to the new APRA requirements, or if they do, they charge a hefty mortgage insurance) as well as the high stamp duty fees, which vary in every state.

This big chunk of cash is hard to save up and won’t become much easier, even if house prices fall from their current levels. Here’s an example – if a $500K house in NSW dropped in value by 10%, the purchase price falls to $450K. The deposit also falls, but only from $100K to $90K, while the stamp duty only falls from circa $18K to around $16K. Total upfront costs have gone from $118K to $106K. Yes, it’s less, but still numbers that are completely out of reach for many young people.

Interestingly, when it comes to loan repayments, the baby boomers actually had it far worse than today’s young people, as they had to pay 18% interest rates compared to current discounted variable loan rate of around 4.75%. Finder.com.au recently release a report showing the average baby boomer had to spend 47% of their take home pay to service the average mortgage, whereas young people today have only to commit 31% of the average income to pay the average mortgage.

Now let’s look at the downsides of the policy if it’s enacted. Unemployment will rise, meaning first home buyers (amongst others) may not even have job security and on top of that, rents will rise, making it even harder to save up that deposit.

There are other, better ways to improve affordability than enacting a policy that will endanger the economic freedom of every Australian.

80 thoughts

  1. Hi,

    How have you formed a link between removal of negative gearing and unemployment rising? It’s apparent you’ve drawn some very wide assumptions and generalisations to come to the point of saying this, all without actually providing any data!

    Also negative gearing is not keeping a cap on rents, rather it is the market that dictates how much rent the owner can charge (this will always be the case regardless of NG or not).

    You also say here there are better ways of improving affordability… but have listed nothing!

    Regards,

    Liked by 1 person

    1. Hi Mr

      Thanks for your comments.

      The current proposal will cause a shock to the property market, which will cause unemployment in this industry, Australia’s largest. There’ll also be a ripple effect on the economy. It’s our customers too who will suffer along with us – our mutual ongoing wellbeing is intertwined. We haven’t added too many stats to this site yet, to avoid the inevitable bogging down in numbers that seems to be occurring in this debate so far, but please be assured more information is coming to the site soon.

      You also raise the question of rents and are quite correct in saying neg hearing doesn’t provide a cap – rents (like all commodities and services) are determined by the balance of supply and demand. Fewer rental properties will mean higher rents.

      As for other options – again we are trying to keep this as simple as possible. There are no other options on the table right now and as much as we would like to be putting them forward, it’s not our place to do so. Ultimately, we cannot understand how and why anyone would suggest making radical changes to Australia’s biggest industry when we’re currently in a fragile economic environment.

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      1. Hi,

        Thanks for the response. Sorry though I still don’t quite follow –
        1. Why would there be a rise in unemployment in the property industry if NG was removed?
        2. Who is to say there would be fewer rental properties just because NG is removed?
        3. You mention we are in a fragile economy. What does investment into a non-producing asset (i.e. property) do to assist us to get us out of this situation? Arguably if it was removed people would invest in Aus business which actually is a positive for the economy.

        Might also add, presuming you are here representing the view of the real estate industry, no one is better placed to put forward actual ideas on how to improve affordability!

        Regards,

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        1. HI MR, Happy to keep the dialogue open!

          To clarify;

          1. Survey shows that between 32% (LJ Hooker survey) and circa 73% (REIQ) of landlords would sell their investment properties if this policy is enacted. With shrinking rent rolls, property managers and administrators will lose their jobs (and obviously this supply issue affects tenants too). We also anticipate a market stall, meaning there’ll be fewer properties bought and sold after the initial rush to exit, meaning salespeople’s employment will also be affected. This flows to the business owners and again, to the associated services in the property industry.
          2. As above, it appears according to the surveys that investors will view property as an unattractive investment option resulting in fewer rental properties.
          3. Negative gearing is currently one of the parts of the property economy if you like, the issue is that if you suddenly remove one of the “cogs” it affects the whole balance. Given the property industry is Australia’s largest, this will mean lots of fallout everywhere. Negative gearing helps people fund investments whose cashflow otherwise wouldn’t allow it, so they’re not going to be necessarily able to invest elsewhere – it’s largely borrowed money in many cases funding the property investment.

          We are obviously trying to simplify very complicated economic dynamics on this site, but for those who want the nuts and bolts of it, we expect some more detailed modelling to become available very soon to further evidence our position.

          There’ll also be a few blog posts about affordability coming up – we definitely acknowledge affordability is an issue.

          Right now, the decision facing Australians on July 2 is a black and white one – should we rip a fundamental cog out of the property economy with one swoop, or should we leave it alone for now and think about better ways to address affordability. We say, why on earth would you risk it?

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        2. Its not just property management industry.The construction and renovation industry, our major employer, requires values to be above current build cost. The renovation sector is highly labour intensive, and people only renovate when they have the confidence in the market that they will not overcapitalise. At present NG underpins the market and is providing confidence to consumers to renovate and develop. Take it out of the market and you will see less investment, less construction , less jobs. That the correlation to NG and employment. Forget the agents, they are the tip of the iceberg. Research consumer confidence vs property values.

          Liked by 1 person

    2. Hi

      Cheers for your views. I have read on as well and all I see are people on $100000+ defending their exorbitant pay packet.

      I am a husband & father of 2 and 31% of my take home pay is $252 a week if it is our family income it is $370 a week. They can show me an appropriately sized property in sydney I can owner occupy for only that. Their statistics are not taking into account that the current owners are on a much higher income than the average person. The average income is supposedly $75000 but this is not normally distributed it is skewed with the majority under this and the few as enormous outliers.

      Further on, we have an eloquent Mr Big Fat Cat (or something) who believes he controls the economic concept of supply and demand. If you all think you can juggle the multiple backtracking that will occur before it happens then you are naive. If Mr Big isn’t going to sell then why would others. The only people who will sell are those that couldn’t afford the property in the first place, without government returns. It would actually let the concept of supply and demand operate effectively.

      This is long so I’ll make this my last point. Forecasting is not science it wouldn’t come close to the reliability needed to be effective. I would rather accept an intelligence test as a means of accuracy.

      Mr Average

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      1. Hi mr average there are plenty of places you could buy on your salary – maybe not in inner city Sydney we agree, but certainly in other cities around Australia. Our collaborative is made up of many who’ve been on the property industry for decades and understand intuitively what will happen (that’s experience and intelligence at work) and the position theyve take months ago has now been backed up not once but twice by independent researchers. The only two we might add who’ve modelled the actual policy. We feel for you but are also sure you won’t want to face rising rents or potential unemployment – these are just two of the likely outcomes should this policy be enacted.

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  2. I’m a mortgage broker, and I can tell you the claim that most lenders won’t lend more than 80% is a bit fat lie. Just considering the big four – ANZ, CBA, NAB and Westpac, all lend to 95% for owner-occupiers. Give any of them a call if you don’t believe me.

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    1. Hi Mat, thanks for your comments. It is possible with satisfaction of the right criteria to borrow more than 80% – but as we said, you’ll be up for mortgage insurance as you know. About $17000 for a $475,000 loan at 95% of total value in NSW. And first home buyers who borrow 95% are highly exposed if property prices fall – this puts the buyer at risk of a negative equity situation.

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  3. I am the guy on the monopoly board. i own all the houses even the ones in the brown strip. Ill dictate what happens and let me tell you…. Neg gearing goes out the window and ill rub my hands and clap loudly as I raise the rents by 50%…… thank you very much govt of Australia. now that how you get rich……

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    1. Yeah you try that mate. You can only charge what the market is willing to pay not what you think you should get. I’ll laugh when your properties end up vacant and you have to reduce the rent to get a Tennant.

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      1. Hi Martin, thanks for posting, we suspect what Mr Monolpoly is pointing out that with reduced supply, rents will go up – the landlord does have more control over price when demand outstrips supply, which is the most likely outcome here.

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  4. Hi,

    So what are Australia’s leading real estate chains & Institutes doing or proposing to help struggling first home buyers then?

    Or do they just plan to back a Liberal Government and continue to ignore priced out first home buyers?

    Ie – shrug shoulders and say not my problem, or actually use this so called influential power to make real change?

    You can’ say negative gearing reductions & CGT discount reductions is bad without making suggestions…..especially when Agents themselves have things to answer for in relation to housing affordability & market manipulation.

    Thanks,
    Daniel Cohen

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    1. Hi Daniel, thanks for your post. The REIA is lobbying on several fronts when it comes to the issues you raise, most importantly on state stamp duty. We don’t believe this is the forum to complicate the message by introducing other options – in fact, the real estate industry has not been consulted at all by the policy maker in question. We would embrace that opportunity to work on policy that would address the real issues. This policy quite simply does not do that.

      Liked by 1 person

    2. As an aging property owner (and investor) ( now 43 years since our first home ) I have a real problem with the current oft-repeated mantra of ‘struggling first home buyers’. It’s just not right ! Permit me some round numbers … 43 years ago we bought home #1 in Brisbane for $15,000. A nice old timber house in an outer suburb. . Nothing flash. I was earning $3,000 So a factor of five. My wife’s earnings were not allowed by the banks (as she could get pregnant). We started at ca 6% interest and over the years saw rates as high as 18% for a short time. But rates of 8% or more were quite common for considerable periods. Now consider today. The BIG change is (and, please, thank the women libbers) that now the banks will take both incomes into account. Approx. average income these days is ca $70 K by two equals (say) $120K to $140K. Factor of five ….and you get $600 to $700 K. That will buy you a nice house or apartment in many areas. And as for servicing the mortgage, gees .. interest rates are at record lows. Unemployment is low. Can somebody please explain the “struggling” ?? if there’s any ‘struggling’ I see it’s the overseas trips and the new cars and the ‘coffees’ and the smart phones and the cable TV etc. Oh and no, you can’t buy your first home in Toorak or Richmond or Point Piper …. unless you ‘picked the right parents.

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      1. They wouldn’t count your wifes income as she could get pregnant, however by your own comment she WAS working, and thus earning a wage. That means your mortgage was not 5x your household income, it was less than that. It was possible to afford a mortgage on a single income, that is typically not possible today (I also expect that your idea of an ‘average income’ is on the high end btw)

        Women today can (and do) still get pregnant. Not all employers offer paid parental leave so incomes can dip. People become unexpectedly unemployed and it can take some time to find a equivalent salary job replace it (though it is very easy to get a pizza delivery job to help the costs along whilst you job hunt, people do need to be more willing to ‘do any job’ when they can’t get their ideal position).

        With your $15,000 home a 20% deposit would have been $3,000. One years income. My modest home cost $370,000 (an absolute bargain). a 20% deposit would have been $74,000. At the time I was earning around 50k, so it was almost a year and a half of my income (of course I couldn’t afford that, I did a 5% deposit and mortgage insurance). I would be curious to know what cost of living (rent etc) was like when you were saving your deposit – rent alone was costing us over 20k a year].

        Now lets consider repayments. Most home loans today are on a 30yr term. Lets work from if you made a 20% deposit and if, based on your statement, use 8% as our calculating value. That would be a weekly repayment of $20.31 (or $1056.12 / year). That is 35.204% of your annual income at the beginning, assuming that within that 30years your wage never increased etc.

        My homeloan is fixed at 4.84% so I’ll do my sums based on that figure. That would be a weekly repayment of $359.79 (or $18,709.08 / year) [that’s less then I was paying in rent on a crappy townhouse at the time I bought btw]. That is 37.42% of my annual income at the beginning.

        When I bought I was 1hr drive from work (public transport was almost 2hrs). How far was your outer suburbs home from your work place (or heck, the city at that point in time).

        Considering other staple living expenses (food, electricity, water) have also increased I think it is very fair to say that most people DO struggle to buy their first homes.

        My husband and I are lucky that we are both well educated DINKS (double income, no kids). Many people do not have the privilege that we have been lucky to grow up with. Many people can barely get by with the cost of rent and living expenses. Trying to save even a 5% (or closer to 7.5% when you incorporate mortgage insurance) deposit on top of just surviving is beyond what a lot of young people (and older people who didn’t have the opportunity to enter the property market prior to the boom) can afford.

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        1. Hi Renee, you’re right on one hand, the data does show it’s harder for first home buyers in some areas to save up a deposit and stamp duty, but today’s youth do have it easier when it comes to repayments that the baby boomers do. This is due to historically low interest rates primarily, which show no signs of rising any time soon.

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  5. Hi, I would like to offer a suggestion to help first home buyers, or more specifically to help lenders to first home buyers. One way around the 20% deposit, is to have your parents guarantee the loan, which we all know about, but which wise parents do not do, as default can ruin the entire family, and beyond. My suggestion is for lenders to promote a system of multiple guarantees. That is, instead of parents guaranteeing the full loan, other friends and relatives can guarantee potions of it, perhaps $50,000 multiples; with such guarantees expiring as the loan balance falls. Is this not possible?

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  6. Hi George, A reasonable suggestion …but as an old hand I’d say IF these theoretical FHBs cannot save the 20% ( …. or the 10% and pay the lenders insurance) they most probably cannot adjust their lifestyle to home ownership anyway. Two people each on $50K to (say) $80 K per year should find 10% deposit a ‘snap’. Smart FHBs are buying an investment property FIRST ( really smart ones while still living at zero rent with Mum & Dad ) and using NG and rent to get the foot in the door and build up equity. It’s NOT that hard !!! Unemployment is low. Interest is VERY low…. We’ve raised four kids. Three have their own home. Two have investment properties as well. One chooses to rent PURELY for lifestyle reasons.

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  7. As an investor I am directly affected by the reduction/abolishment of negative gearing however I believe your logic and perspective on this is hugely bias and frankly flawed.

    I fail to understand how you can state that unemployment will rise due to investors choosing not to invest in rental properties and therefor less rental properties will be on the market causing supply to exceed demand. You also back this up by stating FHB will still be priced out and therefor not able enter the market. Being that people have to live somewhere, where will these people live? Are you able to quantify your argument by giving another example where an essential product of which demand exceeds supply, where investors choose not to invest due to regulations causing them difficulty in having their investment model run at a loss?

    Surely the real argument (after the initial panic) is the potential that rents will increase as investors seek to shift their investment strategies towards a more profitable model and while ever FHB’s are priced out the market they will be forced to accept this change, making the step towards affordability of entering the market greater.

    I’m certainly no analytical/financial expert nor have I studied any real data on this however I struggle to comprehend the merit or likelihood of your argument.

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    1. Hi Matt thanks for your message. It was a bit confusing – you said we’d states supply of rental properties would exceed demand? Assuming you meant the other way around, because that’s the prediction. Nevertheless you ask an interesting question of where people will
      live – in July 1985 the Hawke/Keating government cut NG, restored it in sept 87. According to the ABS, between 1985 and 1988 there was a 37% increase in the waiting list for public housing and a significant drop in the number of private sector dwellings completed, from 129,100 to 107,700 per year. This is aABS data and can be found at http://www.abs.gov.au/ausstats/abs@.nsf/2f762f95845417aeca25706c00834efa/f93a40ff13f209dfca2570ec007877a1!OpenDocument

      There is a lot of information on the site and more being added regularly – we’d encourage you to look through it all and if you have specific questions, please let us know.

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  8. the problem with NG is that it incentivises speculators to invest in an asset that may initially not cover costs, but is as safe as putting your money in the bank (I.e you technically you shouldn’t loose your money)

    This is the reason why this unproductive asset class puts home ownership out of reach for the younger generation because everybody has jumped on the bandwagon and driven prices higher Snd higher

    if high prices are not causing anybody concern shouldn’t the recent trend (admittedly Iv only read one artical with a story like this) of first home buyers purchasing their first home on a 30yr interest only loan terrify!

    if we’re going to throw out predictions I’d say this later trend will begging to occur more often.

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    1. Hi Tony, interesting comments, but rest assured we have various concerns and welcome a debate over property tax reform. This is not that debate though – this is a fight against a policy that Labor has not even modelled and that will have untold negative consequences for our economy. It’s now been independently modelled by Adept Economics and SQM research and both say it’s not a good policy. In the current environment of uncertainty – especially after Brexit – we need stability, not a sledgehammer to our economy. Please, have a read through the blogs and links page (SQM report is linked there) and you’ll understand what we’re getting at.

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  9. Considering Labors policy is to grandfather exisiting neg gearing and only abolish it on existing homes not new ones I don’t understand the pushing of the point that there will be a ‘fire sale’. There won’t be. The changes won’t affect the status quo, so stop the fear mongering.

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    1. Hi Sam with all due respect, the grandfathering arrangement will not protect existing investors: there will be price falls, not because of a fire sale but because there will be fewer buyers in the market place. Please read either the adept economics report or the sqm research report – here are the only two models of the actual policy and both predict price falls. So essentially, existing investors who are making a loss on cash flow (it negative gearing) will be allowed to continue to make that loss, only to lose asset value. The whole premise of property investment is capital growth, not capital loss. The leftists have been quick to call this a scare lingering campaign, but actually anyone who’s stopped to read objectively the information provided has been very grateful. What the parties are telling you is not reality – but why should we be surprised at that?!

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  10. Message to first home buyers …
    After 43 years as a property investor I offer these ‘tips’ if you really want to ‘help’ first home buyers.
    1. Challenge the ‘sacred cow’ in the property equation. This is the CGT free status of the family home (PPOR). it’s this tax free status that causes owner occupiers to over-capitalise which in turn drives up all home values. It’s not investors doing this. We rely on a reasonable rental % return. The worst is owner occupiers who buy an existing home, tear it down and build a new one. ( As an investor when I SEE this happening in an area I BUY because I know values in that area will rise for certain. )
    2. Challenge our immigration policies. Per head of population we take in more migrants than any other country. Hello ?? They all need houses. They all compete for the same housing stock. Most migrants want to live in our capital cities.
    3. Challenge the ‘Not-In-My-Backyard’ mob. Those people who want ‘more housing’ but just not in their street or suburb. It always occurs to me these are the parents of the children who complain about house prices.
    My opinion is house prices will continue to rise in Oz almost no matter what. But if you remove NG, you will restrict investors to the “rich” who can afford to carry their losses while their investment grows in value. But you will eliminate the small investor ( the Mom & Pop ) from the market.
    4. if you’re a smart FHB you start living at home ( free) and same time buy a negatively geared investment property.

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    1. As far as points go.
      1) I’d like to see evidence to prove that’s the main cause of increases in property prices,
      2) rubbish. http://www.abc.net.au/news/2015-09-08/fact-file-australias-refugee-intake/6759456
      We’re #1 on a per-capita basis for resettling refugees from the UNHCR but 28th per capita in terms of total refugees
      The total intake in 2014 was 14,350, the 2015-2016 total migration level is up to 190,000
      Also I doubt that too many refugees are initially buying houses in Sydney or Melbourne.
      3) Not sure that’s a particularly big issue, again got any stats to show it’s a problem?
      4) That’s not entirely practical for a lot of people, my first job was over 2000 km from my parent’s house. .Also terms for investment loans are harder to get for people than a home loan.

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      1. Hi Hamish,
        1. I didn’t say it was the ‘main cause’. I said it was a factor to be challenged. But based on my many years of observation ( and successful investing) it’s real. For a start, suburbs with a higher % of OO tend to have better % capital gains. This is more evident in the ‘inner rings’ where land is ‘all used up’. Kinda 10 -15 Km radius.
        2. I didn’t say ‘refugees’. I said total migration. and keep in mind migration is in addition to our internal population growth.
        3. Talk to some developers ( I am not one) or just read your local paper at times …about the time and cost of getting a medium size townhouse development through council. Real world stuff. VCAT , lawyers etc etc It all REDUCES the amount of new housing constructed AND increases the cost.
        4. If you traveled that far you did it for a good salary … I’m guessing. So next best to living at home is rent and buy your investment property where you think you might live in the future. One of my kids chose this. He rents CBD but bought in the outer -ring. Good rental returns too. Harder to get an investment loan. RUBBISH. The three ” C “s of credit apply to all bank loans. Always have. Always will.

        Where there’s a will, there’s a way Hamish. Buying any property has never been easy…. The question is “Do you really want to do what has to be done ????”

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    1. Hi rusty no we don’t. House prices are already affordable in the vast majority of Australian areas. Its the upfront costs that make property unaffordable and we believe stamp duty reform is a key solution, along with measures to help first home buyers with saving deposits.

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      1. Just to confirm, in the opening paragraph you state 10% in price reduction will have little difference on up front costs (I calculate 12k, 2k reduced SD+ 10k reduced deposit) yet changes to Stamp Duty at 18k will make all the difference?

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        1. HI Clunka, to address affordability for first home buyers, a comprehensive approach is required. We are talking with the First Home Buyers group about this and they have some interesting ideas to explore post-election. We all agree this policy is not the solution to affordability.

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    2. Hi Rusty,
      Housing affordability is more than just house prices per se. But I agree they are a factor, Other major factors are interest rates ( currently the lowest in recent history ) and household income and employment levels ( both doing quite OK.). Predictions of further IR cuts will help if the eventuate.

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  11. A few Questions:
    Why would current investors exit the market if the prediction is that their rentals will effectively earn them more money due to rises in rental prices?
    Hasn’t NG been the greatest reason for inflation in the property market, effectively raising property prices and rent? It feels as though instead of massive interest like the baby boomers we seem to be dealing with over-inflated prices.
    Where did you get your statistics from where young people only have to commit 31% of the average income? What is the average income for this statistic? (Because it would be great to see what the average loan repayment is also).
    If the majority of investors are negatively geared and there IS a GFC that creates further unemployment, could this not be potentially catastrophic? (Mass foreclosures, many renters left without a home) due to the inability to pay off over extended debts?
    If a large % of investors are going to sell, who will be there to buy the over the supply? Obviously not investors?
    Isn’t it a bit of a double standard to have modelling based on potential low confidence in investors and not call this a scare tactic…

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    1. Hi Clunka, a lot of questions there!

      In answer;

      1.Most property investors have the goal of capital gains ie, the price of the property increasing over time and taking a profit on the sale. This is because the yield on property (or the return on investment) is generally quite low on a cash flow basis – or even a loss, hence the need for negative gearing. If property prices fall or go backwards, the key incentive for investing disappears.

      2. No, the greatest reason for property prices growing in the most recent boom is low interest rates, not negative gearing. This is another lie told by politicians to sell a policy.

      3 & 4. This figure is from a study done this year by Finder.com.au – you can find the detailed report here http://www.finder.com.au/housing-affordability-battle-of-generations

      5. Yes, the situation is potentially catastrophic if there’s a GFC, particularly with Brexit news. If property prices fall, there will be many Australians who find themselves with negative equity – and banks may well foreclose even if the homeowner can pay the mortgage, but can’t pay the bank the difference between what the property is worth and what they owe.

      6. We see a flurry of activity in the year leading up to the policy as some investors bail and others get into the market to take advantage of the grandfathering option, but after July 1 next year, the number of sales will stall. This is supported by the SQM findings, which you can find on our links page.

      7. This is not a scare tactic, this is information – if you’re talking about our information, we are pleased to report that the vast majority of our customers have been really pleased we’ve shared it with them, given the untruths being perpetuated by the policy maker. While our campaign has now been running for almost two months, we were very pleased to see that last week, what we’ve been saying all along has now been backed up by not one but two independent research houses – and we might add, these two are the only reports that model the actual Labor policy, not negative gearing in general.

      We would close by saying that we view it as extremely irresponsible that Labor and the Greens are both proposing changes that have not been modelled and that neither party has consulted with the property industry. The onus is on them to prove their policies are not going to be detrimental to our economy and so far, they have failed to do that, meanwhile the evidence they will be damaging is becoming overwhelming.

      Thanks for you questions.

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      1. Its extremely irresponsible for a government to maintain ineffective taxation policies that cost billions a year during a time when our budget is still in a deficit. Negative gearing was brought in originally to encourage an increase in housing supply which hasn’t occurred where over 90% of negatively geared houses are for existing houses not new houses. Its moronic for a government to encourage speculative investment in an asset class that does very little to improve housing stock. As a taxpayer why should I continue to pay for a taxation policy that’s very inefficient at achieving its one and only goal of improving housing supply?

        Your description of a property investor is more else a speculator (the expectation of price increases when metrics (rent yields) don’t support an increase in price levels):

        “1.Most property investors have the goal of capital gains ie, the price of the property increasing over time and taking a profit on the sale. This is because the yield on property (or the return on investment) is generally quite low on a cash flow basis – or even a loss, hence the need for negative gearing. If property prices fall or go backwards, the key incentive for investing disappears.”

        I can find a number of “independent” reports that support the abolition of negative gearing, the cherry picked reports you’ve mentioned aren’t special when i can find an equal number of reports saying the direct opposite. for example:

        http://www.acoss.org.au/images/uploads/Fuel_on_the_fire.pdf

        http://mckellinstitute.org.au/wp-content/uploads/pdf/McKell_Negative-Gearing_A4_WEB.pdf

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        1. Hi john b, we would say it’s actually incredibly irresponsible to put forward a policy with such far reaching effects without modelling it. The reports you refer to are not modelling the actual policy, they’re about negative gearing more generally. The only two reports that have modelled the actual policy in the table (the ones you’ve said we’ve ‘cherry picked’) both says the labor policy simply won’t do what it’s supposed to and will cause extremely negative economic effects. It’s all pretty clear, if you’re able to look at it objectively!

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  12. In 1980 median house prices were $39k while wages were $13k. So only 1 year of savings was enough for a 20% deposit. High interests rates are often quoted as an issue at the time for servicability yet most couples with 2-3 years savings would have enough to purchase a property outright. Baby boomers are an entitled generation who still expect generous tax breaks even though they have had it good for more of their life. Unfortunately most of our politicians are baby boomers also and continue this trend. Most of the fat in our system is for hand outs in this area yet governments continually pick on low income earners, social welfare and the elderly…

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    1. Hi Jimbob,
      We ‘baby boomers’ didn’t have it all our own way as you imply. We bought our first home in 1973. It cost $15K and I earned $3K. I’d saved the deposit living at home ( student) and working week-ends and holidays at ‘all manner of things’. (The pinnacle was the mid-night to dawn shift in a railway goods yard !) The bank wouldn’t consider my wife’s income (a teacher who earned more than me) because she could get pregnant. The house was a modest timber house in Brisbane’s outer suburbs. It was no easier then, than I see my kids doing today. Incomes today are good. Average is ca $55K p/a. Plenty of work around if you want it. Plenty of ‘second job’ oportunities. …..BUT if you think the idea is to ‘live on welfare’ in a nice townhouse in South Yarra …ain’t going to work !!

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  13. The real issue with negative gearing is that some other tax payer is paying YOUR share because YOU can’t get enough rent to cover YOUR costs! It must be the first thing to go to even the playing field for all tax payers.

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    1. Bob, have you not read any of the website or the other comments? Although bill shorten is regularly calling negative gearing a subsidy, it’s not. It’s a legitimate tax deduction, one that will still be available even if his policy gets up, although only wealthy investors who have other investments or multiple properties will be able to take advantage of it. What a property investor who is negative gearing is actually doing is providing housing to someone who gets to pay a lower percentage of the homes value in rent, compared to other countries that don’t have negative gearing. Maybe read the sqm research report in our links page, or the blog about what negative gearing actually is? We don’t blame you for being misinformed, there’s lots of misinformation being put about, if you were cynical you might think deliberately but we hope it’s just a lack of knowledge. Please, do take the time and feel free to ask any questions you might want to afterwards.

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    2. Bob,
      Do you realise that while we use the term ‘negative gearing’ ( which is becoming politically charged and very mis-understood in an election atmosphere.) it is in fact NO different to EVERY other business? Every business has income. Every business has expenses. Every business deducts their expenses from their income before calculating their tax ( on profits.) So, by your logic does every business dodge tax by claiming their expenses ?? When a person ( or couple etc) operate a “property business” with rental properties, their income comprises that from (a) their personal exertion ( wages, salary ) plus (b) their rental income. And all property expenses are then deducted from the total income. Just the same as every other business in the country. Also, incidentally as every taxpayer is entitled to claim a deduction for (certain ) expenses incurred in earning his/her salary income.

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    1. Hi Tom, good question – positive gearing is where you pay tax on income when it exceeds expenses, so no, investors will still pay that tax! The policy proposal is that investors just won’t be able to claim losses against other wage income as a tax deduction.

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  14. Hello,
    Can you please confirm whether this negative gearing policy will affect only those who are going to purchase investment property after 1st of July 2017 or does it affect everyone in the current investment market also

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    1. Hi Shiju, the labor policy only affects purchases made after 1 July, however if there’s a hung parliament or the greens were to get into power, it’s more likely it will affect existing investors as we understand the greens want a more extreme policy which would not allow existing investors to continue negative gearing.

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  15. My husband and I just bought our first home. We had been renting for several years and also struggled to get a 5% deposit – how does one save for a house and pay rent at the same time? My parents don’t own homes so we had nobody to go guarantor. We found a great broker, an affordable house (with monthly repayments comparable to the amount we had been paying for rent), and took out a personal loan to make up the difference. The PL isn’t necessarily an option for everyone, but as mortgage repayments were almost the same as our rent, and we’d been able to save on top of that, the PL repayments were less than what we put aside for savings each fortnight after paying rent – so, essentially, the PL repayments allowed us to move into a house at least 5 years faster than if we’d put the same amount into a bank account to save a full deposit.

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    1. Hi gen y home owner ! Excellent work, you’ve done the hard yards and now you’re in your own home. You’re one of the first home buyers we’re concerned about – if labors (or the greens) policy is enacted and prosperity prices fall, you are likely to find yourself with negative equity ur yiu own more than the property is actually worth. Banks usually have a clause where they can force you to either pay the difference or force you to sell if you can’t. This is a dangerous position that many young home owners may well find themselves in. It’s a key reason we’re fighting this policy.

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  16. So basically do nothing is your recommendation? Clearly a country reducing its taxable income based on a strategy of encouraging property investors to lose money in the short term, whilst seeking their capital gain nirvana, is a model that should be encouraged for eternity. Why touch this….. what could possibly go wrong with that model?
    There is obviously a point were reducing taxable income via methods such as NG simply means increasing tax, meaning less money to spend, more pressure on the economy, lower rentals, more NG, more tax increases, even less money to spend, further reductions in rent, more NG, more tax increases, etc… Good luck with your Capital Gain when this cycle kicks in.
    Bag Labour for its policy, but don’t bag anyone for trying to address this engineered mess

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    1. Hi Really, we’re not bagging anyone for trying to address the issues, we acknowledge there are issues to address. We’re bagging this policy, which actually doesn’t address any of the issues and will open a can of worms for our economy!

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  17. No matter what you do or say the Real Estate are always the winners because they are the one’s who Dictate (Worse than Car Salesmen) FACT. Stop the Negative gearing once and for all.

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    1. Ok tony, interesting you think we’re so powerful! If we were, we certainly wouldn’t allow a policy like this one to get up as it will cause untold damage to our economy. We can’t control the outcome but we’ll certainly try to help people understand the risks. And many, many people have thanked us for that.

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  18. You guys are corrupt. Im ready, along with thousands of others, to buy as soon as negative gearing is removed. You are only thinking about your own investment properties.

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    1. Hi soft serve no corruption here, although we would wager that the policy makers have been extremely deceitful in their positioning of this policy. We’re thinking about our industry, our clients – buyers, sellers, landlords and tenants – and every Australian who relies on a sound economy (which is everyone). Sounds like maybe you’re the only one thinking purely of yourself?

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    2. Hi softserve,
      I’d caution your approach. Firstly, there is a good chance Libs will be re-elected and NG will stay as it is. Second, we’re in a low, and maybe going lower, Interest rate environment. Read a few books. Low IRs invariably mean rising property prices, and vice versa. Forecasts are that IRs will remain low ‘for the foreseeable future’. Thirdly, post election is the Spring season. Traditionally a time of strong interest in property. So …put all these together with ‘the thousands of others like you’ ……and you could well find yourself paying a lot more in the months ahead. Maybe consider.

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  19. Well even if NG is left untouched, Australian property is headed for a correction. A correction which is needed to turn this country into a value adding producer. Instead of selling inflated priced houses to each other and slapping each other on the backs at BBQ’s about what smart investors we are, we will see some growth in real business, exporting to the world.

    Unfortunately property has turned this country into a dumb country. So much potential wasted, perpetuated by government lies.

    NG may delay or soften the reset but it will happen. Let the our debt pile up, let the credit agencies downgrade our AAA rating, watch cost of credit rise as we are seen as a risky investment. Watch resources and capex continue to fall, which will ultimately bring down prices. And if that doesn’t work, it is just a matter of time for another black swan event and a credit crunch.

    Unfortunately it will result in a lot of pain but will leave a nasty scar for these so called property ‘investors’ leveraged to the eyeballs. Long term it will be a massive benefit for the country.

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    1. Hi There the property market is already undergoing a correction in many areas – significantly so. That’s why this policy is so dangerous – it’s a sledgehammer and completely unnecessary. Markets self regulate based on demand and supply.

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  20. To Really,
    Firstly, as an active property investor, I’d challenge your ‘engineered mess’ assertion. From ‘inside’ this business it is stable and well ordered. AND it’s no cake-walk-to-riches !! (If you want to see an ‘engineered mess’ take a look at our increasingly complex, always changing superannuation regime !! )

    Secondly, exactly what problem are we trying to solve here? Is it housing affordability for all Australians ? Or is it trying to help fhb’s ? Is it a capital city issue only ? Or a nationwide issue ….including country towns ? Is it about housing AT ALL, or just trying to get more taxes ? I think we need to clearly identify the problem…. before we ‘take out our shotgun’.

    Keep in mind one benefit of NG is an adequate supply of rental housing and approx 30% of Australian households choose to rent. The construction sector is a major employer. Property underpins the stability of our banks …etc etc ….. With the wrong approach, we could very easily harm a lot more people than we ‘help’.

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    1. Hi Landlubber,
      My issue is that the even with these record interest rate lows, negative gearing is reportedly costing us all $3.6 Billion based on 2013-14 tax data, the latest available. It shows that each negative gearer claimed an average loss of $8722 per year.
      So, as I alluded, my concern is the “do nothing now approach” as the number of negative gearers increases seemingly unabated what will the $3.6B be this year? And I can’t even imagine what this NG noose starts to look like if we pretend that interest rates eventually do start to increase?
      I am not sure that Labor have the right answer to NG, but at least they are starting the conversation that needs to be had. I fear that it is not a discussion that bodies such as the Real Estate industry, the Banks and the current Liberal leaders want to have in public.
      I would be interested to understand why you believe that there is nothing wrong with this picture?

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      1. Hi Really,
        Can we agree ‘the Gov’t’ spends it’s income (from taxes etc) for the benefit of the people in general ? So, in effect, the $3.6bn NG cost/spend (using your numbers) enables the private sector to provide about 3 million affordable rental properties. Simple math …this averages at about $1,200 per property. Seems REAL good value to me !! What is the alternative if the private sector suddenly finds it quite unattractive / risky to provide these properties? (…and I tell you IF NG goes AND the CGT discount is cut, it’s all over for the average Mum & Dad property investor.) So what fills the gap ? Gov’t housing ? What is the cost ? You do the math. 3 million dwellings at (say) 300-500K each. Cut the numbers by 50% etc etc. The numbers are huge ! ( …. and currently reflected somewhat in private sector housing debt.)

        Consider …. Compare this with the $50 Bn were’ going to spend on b—-y submarines……Even though NO Australian submarine has seen active duty since WW1 at the Dardanelles …. ( Google it !)

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        1. Thanks for your comments Landlubber,

          I do appreciate your position and I am more than happy to agree with you when you state that the govt spends it’s income (in fact it often over spends it), but that is exactly my core issue. With NG reducing this income it then has to replace this – enter the ever decreasing species called the taxpayer (assuming they are not going to reduce expenditure any time soon – see your submarine comments…). Increases in taxes to offset this reduction will ultimately impact other areas of the economy – including the money available for rental (loop…)

          I cannot agree however with the argument that NG provides us with “3 million affordable rental properties”. Australia’s rental vacancy rate has hovered around 2 per cent and 4 per cent for 30 years, much lower than in the US and Britain, whose tax ­systems don’t permit negative gearing. For many years supply and demand has been able to manage our occupancy rates in Australia without a heavy reliance on a tax engineered solution such as NG to provide this supply.
          Successive governments have reduced almost every other tax reduction/minimisation method that they could get there hands on, except this NG sacred cow. This is one of the reasons why this once “ugly sister” (aka negative) method of reducing taxable income has turned into something that now is so appealing. NG has been around since 1915 however the NG numbers have only relatively recently stared to increase, exponentially – along with the subsequent enormous hit to our tax revenues. From 6% of taxpayers with a less than $200m impact on tax revenue in 1994 (even with the high interest rates, rental income vs. interest paid were not so disparate back then) to current levels with 15+% of taxpayers using NG to cover billions of offset losses (8+Bn in 2013-14) and triggering 3+Bn in lost tax revenue – and this is with our record low interest rates!
          Further, forget “affordable rental properties” and that “30% of Australian households choose to rent” as you stated earlier, there is a real argument that there would be more “affordable house ownership” if NG had not become one of the last remaining bastions of tax relief available when making investment decisions and thereby one of the key factors contributing to the impact on housing affordability levels (not the only factor though, agreed). If I am wrong, remove the NG and see if housing prices stay the same (not that I am suggesting this, I am also a property investor, I am just making sure that we are clear that NG is playing a part in reducing housing affordability and increasing the number of renters – not quite the saviour it is sometimes portrayed as).

          I again re-iterate my concerns on how we plan to manage this increasing NG tax liability noose before it is too late to make any managed changes, especially if interest rates start to move up again at historical speeds.

          There are some great comments for and against NG throughout this page and clearly there is not a simple answer to striking the right balance with this policy, but at least there is now increasing debate occurring about this, I believe that the 2010 Henry Tax Review can take the credit for much of this. I am sure that we all just hope that this debate can be an honest one and not used as a political point scoring exercise (and so does my Unicorn).

          I will leave you with this comment from Reserve Bank assistant governor Malcolm Edey during a Senate inquiry into affordable housing in 2014….
          “We made some extensive comments on the tax treatment of housing 10 years ago, and our general position has not really changed. If you have a tax system that excessively favours leveraged investor activity then that is going to cause distortions in the market.”

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          1. Hi Really,
            But if you look at Labor’s policy it won’t actually increase tax intake. 1) Existing investments are grandfathered. ( No more tax there.) 2) New property can be neg. geared as usual (No more tax there.) 3) If an investor chooses (after 1 July 2017) to buy and let an existing property he has to ‘carry’ the losses …but gets to eventually offset them against future ( positive) income from the property and / or offset the CG if he sells the IP. ( So tax comes ‘in’ to gov’t short term ….. IF any investor does this !! … but then goes out at a future date …. so no real net gain there ….)

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            1. Hi Landlubber,
              Is that correct? Does Labor’s policy allow losses to be carried forward to offset any future positive gearing and not just CG? So a landlord wouldn’t necessarily have to sell to recover the losses?

              Also, do you know if the abolition of CGT concessions would reinstate the indexation of capital cost amounts in any way? The ATO used to publish indexation amounts for each year until the CGT concession was introduced. I don’t think initial capital costs are indexed anymore as the concession was to replace the effect of inflation.

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            2. http://www.alp.org.au/negativegearing
              Hi Confused …( aren’t we all )
              Above is link to labor policy. Although it does not specifically say ‘offset losses against future ‘positive’ gearing I’d point out this method is VERY ‘standard business accounting’ … if that makes sense. Also see next post where you can offset ‘losses’ from one IP against ‘profits’ from another (positively geared IP) which is, in effect doing the same thing’….just in different tax periods. Long term property investors (like me) already do this. Any ‘reasonable’ property ‘goes positive’ after some period …. rents go up … in recent times interest rates go down. And if you’re going to build a reasonable size property portfolio you need a combo of growth and ‘cashflow’ properties.

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              1. Thanks Landlubber,
                I found the few relevant lines amongst the mountainous diatribe. Weird though. It seems the policy would only affect those who don’t already have investments, and the more investments (of any kind) the less affected someone is? Non investors, which I presume include most first home buyers, are the most hurt by the policy as they’ll be less incentivised to invest later on.

                Really bizarre that Labor say this helps home buyers as the wealthy will be largely unaffected, the existing mum and dad investors will still claim, the new investors who can afford to wait can still claim against future positive earnings and any CG if they sell, but those with the least capacity will be the ones even more unable to invest for their future.

                The more I learn the more I don’t think Labor’s policy will make that big a difference to me. Maybe only in the sale price of my unit if I ever sell, as it will be less attractive to buyers since it’d have no immediate NG. But even then a buyer could still make future claims on positive gearing or CG. So…. what’s the point of the policy at all? Was it all scaremongering and attempting to start class warfare arguments to grab votes?

                This policy hurts those who can least afford it the most, it just bounces off the wealthy. If I had 10 properties I’d be laughing as it would make rental properties more scarce by a bit, maybe not a lot, and my properties would be even more sought after by tenants. With vacancy rates at 2-3 % then you only need to have 2-3% of investors drop out, or not start, and rates drop to 0% and rents go up.

                I really am still confused, but it’s changed from not knowing how it will affect me to how do Labor think it’s a good idea, and how do some people believe them?

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                1. Hi Confused …yes, I think I agree with you. After thinking on the outcomes I think the nett nett will be new investors will avoid established property and may buy (some ? lesser ?) new property. Established investors will carry on. Vacancy rates in established areas will fall and rents will rise.

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            3. Landlubber, are you replying to me. You seem to be back on the Labor policy. I was hoping the debate would stay away from politics and again you still do not offer a way to address this increasing NG liability.
              Ok, so here goes…. at least this proposed change has a chance of slowing the increasing NG tax impact (there I said it – although it does looks like a dangerous policy).
              As you state they are not getting rid of it, they are just tinkering with it. Obviously whilst the NG remains the relevance of the quote from the RB remains as well “….If you have a tax system that excessively favours leveraged investor activity then that is going to cause distortions in the market.” and seriously who knows what these distortions will next bring.
              There are a lot of variables to consider when implementing or now removing these kind of policies. I am not sure that anyone picked the extraordinary growth in the number of Australian “property investors”. Heck, Labor are still trying to grasp that many of their voters are already property investors today. Perhaps if other investment strategies were pushed, or at least left alone (e.g. Super), then who knows how long property investment will remain the “flavour of the month”.
              Obviously there is a tipping point where the growing number of property investors will stop (mathematically we can’t all be local property investors with multiple properties, can we). So maybe this is a passing issue (it took 100 years for NG to now become a problem) and therefore maybe a cap on NG claims or a “%” of the annual NG claim being kept as a CG offset credit at the end might be a way to slow the bleeding without causing cardiac arrest. But with NG’s current rate of growth I still believe that its impact cannot just simply be ignored to increase unabated. Although I have a feeling that you still do not agree with this premise.

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              1. Hi Really, As I said elsewhere I think the first question for our politicians (and you) is ‘what problem are we trying to solve ?’ If it’s increasing the tax grab by this NG tinkering policy as I pointed out in previous post, ain’t going to happen…. as net net there is no new tax income ! I cannot see how it helps fhbs as I don’t see values falling… nor supply increasing. All I see is vacancy rates tightening ( as investors shun housing as an investment and oldies sell off ) and rents rising. NG rate of growth will slow with lower IRs. And don’t forget all these ‘successful’ ( maybe !!) property investors are only trying to be financially secure so as to not rely on welfare !! A worthy goal IMO.

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  21. Few Q’s. Under Labor’s policy, can a positively geared property still be offset against a negatively geared one, even one bought after the deadline? If so, would all this be totalled before considering tax, resulting in a large portfolio of properties being tax neutral despite there being post deadline negatively geared ones? Also, how are SMSF’s affected? Why aren’t other types of negatively geared investments affected?

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    1. Hi there confused, yes you can still claim the losses against other investment income – makes a mockery of the Pollies saying the policy will stop wealthy investors have multiple properties! We can’t offer specific investment advice according to the law but in general terms people with multiple properties are likely to end up neutrally geared if some lose and some make a profit. Same rules apply to SMSFs. Labor intends removing neg gearing from other investment classes too as far as we are aware, although it will affect property investors more.

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  22. So to be a first home owner you suggest buying in areas where prices are lower, now I am no real estate expert but prices tend to be lower for a few reasons, high local unemployment, lack of services (health, education, transport and so on), first home buyers tend to be young families (there is no way as an average wage earner I could afford to own a property as a single person, also you talk about baby boomers having higher interest rates that take up more of their average income you fail to mention that 18% was for a brief period in the 90s and that from 1959 until present their has been a total of around 30 years where interest rates have been in double digits and the vast majority of those in the low double digits with only a handful exceeding the 15% mark and most of those in the 80s and 90s. So your argument that lower house prices were outdone by higher interest rates holds no water if you look at the overall rate trend and not just cherry pick the highest number

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  23. Hi, I am a stay at home mum with husband and 2 kids. My husband earns under $100k a year. A few years ago we were able to buy our first investment property because we thought it would be a good way to help our kids out when they were ready to get there own home as we would sell it and put the money we made on the property towards their homes. Now I have been reading all I can about the consequences if negative gearing will be abolished. People are say it wont affect us as negative gearing will be grandfathered for existing properties and only new builds will be able to negative gear after 1st july 2017. These changes will directely affect us, and yes we can only afford our investment property because of negative gearing, but for us the investment should of worked due to capital growth. Now take away negative gearing and there goes any potential buyers we might of had as our investment property is part of an investment only complex. There are no ower occupiers in the complex. So now our investment will decline in value. We have already made the deccision that if Labour goes ahead with these changes we will sell even though we will be able to keep the negative gearing for as long as we own the property its the resale price that we will lose on so we will be better off to get out now. Now if Labour want to make some changes why not just limit the number of investment properties you can negative gear to 1 or 2 so the small investers still have a chance to do it. This is all aimed at those rich people that have multiple properties so limiting the number of properties you can negative gear will directly affect them and not the mum and pop investors. Its always nice when people on exsorbitant wages think they know what is good for us average income earners. Maybe if politicians only got paid $100k or less they would be in touch with the people more.

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    1. Hi concerned the points you make are all valid and it’s good to see you have a deep understanding of the risks – which you’re right, will affect you regardless of the grandfathering clause.

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  24. Hi, thanks for your answers. I see at the moment it looks like a Labor government that may well need Greens support, and they want even new properties included. At this point it appears negative gearing as well as capital gains concessions will be dead. I agree that very few will choose to be landlords now and a lot of the current ones will give up due to little chance of capital growth esp’ in the unit market. I spoke with my property manager yesterday and she said if Labor win she’ll be selling her investment unit and probably lose her job eventually due to a reduction in business.

    We are not capital city investors, in our town there’s been no capital growth for over 6 years, it may even have been slightly negative. No quick buck here, it’s an investment for the decades that will be destroyed in a moment. A big % of investors in this area will be ruined as their retirement plans hinged on long term investments that rely on stable policy. That’s all gone now. Same as superannuation can no longer be relied upon due to policy swings. I don’t see any future government not seizing large parts of superannuation to pay for promises. Keep anything you can save under your bed or buried in the backyard.

    A motel or apartment business can claim its costs against its income, but with the destruction of legitimate business losses for owners, that can only make investors go elsewhere. Three things can happen: rents will go up so new investors (who will eventually be the entire market) don’t suffer losses they can’t claim, properties will sell mostly to owner occupiers leaving fewer for tenants, or values will fall so losses don’t occur. I predict all three will happen to some degree, leaving tenants the big losers. Very big losers. Even if the Greens’ policy doesn’t happen and new properties aren’t affected, eventually anyone who wants to rent will be 40 km from the city centre. Almost no renting within 40 km? Doesn’t worry me but it will worry a lot of tenants.

    Depending on the total effect, the new gov’ may eventually have to find housing for another million public housing tenants. I know our tenant is invalid and though the unit isn’t flash she still could never afford to buy it even if it fell 50%. If we didn’t take the risk of investing the gov’ would have to pay her entire costs, maybe even have to purchase a property for her to live. Now add that to the budget x 1 million. Negative gearing is a legitimate cost incurred by the owner, and relative to the tens of billions the gov’ would have to spend otherwise it’s a small and legitimate (yes it is) business expense.

    Houses may not suffer greatly as they appeal to owner occupiers as well, but our unit is in a block that was only ever built to be rented. All tenants. They are 40 years old and need repairs constantly, only negative gearing made it remotely affordable, remember no price growth here. No occupier would ever want to buy one of them, and now no new landlord will ever want to either. Only future option is to demolish and build townhouses to sell, leaving tenants in the street or public housing lists.

    Combined with lower construction and maintenance work, and increased gov’ expenditure to cover the gap left by fewer and fewer landlords, I won’t be surprised to see this a major contributor to a recession in our future. Will Bill Shorten say this is the recession we had to have, just like that other incompetent egomanic Paul Keating?

    I’m an engineer and my job is to find problems before they happen and make sure they don’t. I see a huge problem coming now. I have never earned more than a school teacher. Manufacturing is dead in Australia, we are now a country that makes almost NOTHING. When Whyalla and Port Kembla close their doors, not far away, we won’t even make the millions of tonnes of steel we need, we’ll have to import it and send billions out of the country. You don’t help employees, even union members, by destroying employers.

    My employer is almost broke, no pay rises for the last 7 years but public servants complain about their regular ones. The tens or hundreds of thousands of state and federal Gov’ health employees (many on over $100k) can avoid income tax on an extra $19k (on top of the $18k tax free threshold) through salary packaging since they are exempt fringe benefits tax. They can also claim back GST on home utility bills, even on meals out. Public servants who are not paying their share of tax when people struggling on $40k have to. Why isn’t this rort a huge issue? It costs over $1 billion / year and has done for decades, yet almost no one outside the health system has heard of it. Inside the system I know people who laugh at how they get away with it and how stupid everyone else is.

    You certainly don’t help tenants by destroying landlords. Good on you millionaire Bill Shorten, at least you have your gov’ pension and superannuation, an office and 4 permanent staff after you retire, free travel etc for life.

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  25. I trust everyone is in no doubt that despite Labor not forming government, this is going to come back next election. Don’t think those who are (or will be) self funding their retirement will be left alone. One way or another your future will be threatened again.

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