Negative Gearing - Is it time to remove / change?

[rtt_rules]

(Disclaimer upfront, my wife and I like many Aussies have taken advantage of Negative gearing and still own two rentals (one recent, never neg geared), other exited neg gearing when we moved OS for work in 2010.)


Overall, yes, negative gearing on existing property should end, simple as that. The pro argument for Neg gearing is that it increasing the supply of housing. Yet for existing properties all you have is investors bidding against wannabe home owner occupiers. Most state govts provide a first home owner scheme of sorts to put more money in first home owner pockets, but all that does it drive up the market, it doesn't increase supply.

Neg gearing on new property is up there with only allowing foreigners to buy new properties for investment purposes. It channels the investors into increasing supply, not just out bidding their primary competition, the home owner occupier.

Neg gearing has basically become state funded investment scheme. The yields are rock bottom and rely entirely on capital growth. So low that unless you can invest using negative gearing you are better off saving in a term deposit. We have a block of land at Agnes Waters, we would love to put a house on it for the future and in the mean time earn its keep and pay for the house, just the house, not the block. Without negative gearing the rent won't even cover the interest payments to fund the construction. Forget about insurance, rates, maintainence and capital cost of the land.

Last I looked in 2019, the cost to the taxpayer for negative gearing was $3B pa. Most rentals never actually make a profit. The govt/taxpayer only gets their money back through CGT

So yes for me its very simple,
- Negative gearing should be removed from existing properties
- Grandfather currently owned rentals for 10 years for apt, 15 years for house
- New properties can be negative geared for a maximim period of 25 years.