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I’m glad the Greens keep bringing this up. Something needs to change.
With the intergenerational differences in asset holdings, I think the greens are onto a winner
This is the best summary I could come up with:
The value of tax breaks given to property investors is 78 times the promised minimum new spend on social housing under the Albanese government’s flagship fund, new data released by the Greens shows.
The Greens want the government to guarantee at least $2.5bn a year to be spent on building social housing and for Albanese to encourage the states and territories to bring in rent caps and freezes.
“It’s morally reprehensible that while millions struggle to keep a roof over their heads, Labor are willing to lock in half a trillion dollars worth of tax concessions for property investors [and] give renters nothing,” Chandler-Mather said.
Chandler-Mather urged the commonwealth to phase out capital gains tax concessions and negative gearing for more than one investment property, and incentivise states to outlaw unlimited rent increases.
“Reintroducing the Haff without any improvements is a pathetic stunt that shows Labor is unable to defend their signature housing policy on its merit,” she told reporters.
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Fuck I really hate Labor.
I can’t wait for a left wing party to be in charge of this country again for once.
Its funny for me being from america. Labor sounds so much like it should be left wing. Although they might be relative to our crazy right leaning everything.
At one point they were left and most of the great things we have in this country are from that time.
But an absolute shit cunt of a man named Bob Hawke decided 80s neoliberalism was the way forward and both parties have happily been selling off the country together ever since.
Labor is just a little right.
Our other major party, who are far more to the right call themselves the "Liberals".
When a new minor party started calling themselves the "Liberal Democrats" (espousing Libertarian values), the Liberals complained to the Australian Electoral Commission (who are in charge of running elections) that the Liberal Democrats were deliberately trying to cause brand confusion, they were promptly told that the Liberal Democrats name was far closer to the actual meaning of the words.
It's all a bit of a farse.
The LibDems are just Liberals who want to smoke weed.
Same shit.
And deregulate everything, and reduce funding to schools and hospitals...
Same shit.
Indeed.
That's because US politics is ridiculously conservative compared to Australian politics. Some have even argued that our major conservative party, the Liberal Party, is actually more left-leaning than your Democratic Party.
Yeah democrats are definately center and I would say mostly right of center but they do have some generally progressive folks but the party is very broad across the spectrum. Our republicans I can't even call conservative now as they seem to be in some sort of internal competition with each other on who can be the craziest.
No, absolutely not. The Democrats are hardline fiscal neo-conservatives and on social policy are generally pretty conservative(even had a non-Christian leader?).
You don’t seem to appreciate that your right wing is literally charging into the Hitler/Mussolini/Stalin ballpark right now… they’re so far off the normal spectrum it’s like watching a movie.
Your left wing is WAY more conservative then out right wing… and our right wing is pretty out there
How would you get rid of negative gearing? You couldn't do it instantly, all at once. People have made financial decisions based on it. You could say "no negative gearing on properties purchased after 2023", but then you would still have a huge problem of existing negative gearing. You could phase it out. Limits on how much you can negative gear that reduces every year, going to zero in 20 years.
It's a funny beast, but I don't know that getting rid of it is the right call. I don't think it'd chage anything much:
Ms Jones has a house that she leases out to tenants. The interest on the mortgage and costs on the hosue amount to more than she collects in rent. That difference is tax deductible under the status Quo (Negative Gearing). The law changes, and you can no longer negatively gear property.
Ms Jones starts a new company (TotesLegitLandlord inc) and sells her property to this company that she happens to own. This company leases out a house to tenants. The Interest on the business loan and the costs on the house amount to more than the company collects in revenue. The company makes no profits and pays no tax.
Negative Gearing just makes this whole process easier for everyone. Tax returns are easier and the ATO isn't reviewing several thousand small businesses that are leasing out properties at a loss. It's a bogeyman talking point getting us arguing with each other while Billion-dollar companies transfer all their profits off-shore and pay no tax. That's the scandal that we should be marching in the streets over.
That’s why you also need to reform the corporations act to ban corporate ownership of residential real estate.
Companies are not allowed to trade insolvent. That’s supposed to,prevent that kind of behaviour, too.
However, I agree, people should have the same access to offset genuine losses as companies do.
Similarly, companies should be paying gst. We could make the gst refundable on their primary product. Eg if you make steel, for instance, the raw ingredients should be claimable, but why is the computers you buy, the chairs you sit on, the door, the factory structure, the plumber who rises the toilet etc etc all claimable for a business but not a person?
I think if the company makes no profit and pays no tax that's fine. The problem people have with negative gearing is that it offsets non investment income. So Ms Jones now pays less income tax on her salary.
It offsets personal income by the difference between what the property costs and what it brings in for rent. We need an accountant to chime in here. If Ms. Jones invests money into her business to keep it going (since costs are outweighing income), is that money still income? Or would it be deductible as well?
Either way, that amount isn't a going to be more than the rental income. And under either model the rent income isn't taxed until the property is generating more rent than its outgoings. Once that happens, it's time to buy the next property and go back into the red. It feels like s ponzi scheme, doesn't it?
I see the problems. I just don't know how to fix them.
You don’t seem to see the problem at all, the goal of removing negative gearing is to force people to sell, what that means to their personal finances is immaterial
I don't see how to remove negative gearing. Any political party who even mentions it is immediately unable to form government. Mr Shorten pledged to overhaul Negative gearing during the 2019 election and was quickly trounced, despite the Liberal party being in a shambles at the time.
I also don't see how it is going to make that much difference to the people we want. I don't know how many properties my own landlord owns, but I know it's more than three. Those are the people we want to urge to sell. Negative Gearing just isn't that large a factor in his finances. In his world, the rent collected is his income. Take Negative Gearing away and he just does the 'Landlord inc' company route. Rent collected is company revenue, ponzi scheme continues as his 'company' buys properties and makes no profit.
Give until the end of the financial year. Negative gearing is a speculative investment, if you’re negative gearing your only residence then more fool you.
I think the focus on negative gearing is a bit of a distraction. As many have pointed out, properties are only negatively geared because they are losing money, which makes them looks like poor investments in the first place.
What people miss is on a whole, property actually makes money through capital gains on sale of the property, which will easily offset any of the operating cost that's been accrued. Note though double dipping doesn't happen because what has been deducted on negative gearing is taken away from the initial value of the property, thereby attracting more capital gain tax at the end.
The primary problem is, land value and hence property value naturally rises over time and is unavoidable. As cities grow, they spread out or they get more dense. Therefore an single property will be demanded by more people as it closer than more properties (as cities spread, or more city centres crop up nearby), and lower density than nearby buildings (as density of the area grows). No amount of anger will change the fact that land is a scarce resource, particularly convenient land. And so that price signal is important to allow that land to be used as efficiently as possible (you couldn't want a giant farm near a CBD when it could house and cut commute costs for 50k people).
What we really should be doing is discouraging profiting off this natural and unproductive growth in value. Perhaps this could take the form of having a different capitals gain tax tier explicitly for residential properties. The other aspect is changing the primary residence exemption to be that you have to have lived in the property for at least 50% of the time you've owned it for, rather than just the last 12 months. Though overall, this would need to be designed carefully to prevent disadvantaging people who are simply wanting to upsize, or simply to relocate to an equivalent location.
I thought the central "lie" of negative gearing was that landlords could spend money improving their properties, claim the rent received on said property could never cover the cost of said improvements but in reality be accruing massive capital gains on said property - which will never be taxed until the sale of the property. In the meantime the money spent on these improvements can reduce the owner's income tax, potentially to zero, despite the owner accruing massive wealth (via increases in property value intrinsic to the market and extrinsic via the improvements made to said property) that will not be taxed. Am I missing something?
In that case, if the renovation wasn't deducted off primary income by negative gearing, it would be deducted off the CGT tax when the property is sold as it could count as a capital expense.
IF the property is sold. In the meantime little or no tax is paid by the owner, and millions of people are priced out of the market. The owner however can borrow against the higher estimated value of their property and purchase more property to pull the same moves again. Wealth concentrates towards the rich, inequality increases.
Seems counter-intuitive (again).