Loomio
Fri 15 Nov 2013 3:53AM

Negative Gearing

SA Steven Armstrong Public Seen by 6

I propose that from 1/7/2014 in Victoria, if an existing house is purchased to let such that it attracts a negative gearing Federal tax rebate The State of Victoria levy an annual charge on that property equal to the negative gearing rebate. No such levy is charged on newly constructed dwellings. The levy only applies to properties settling on or after 1/7/2014.

SA

Steven Armstrong Fri 15 Nov 2013 3:54AM

Let's try Loomio out.

CL

Craig Lambie Fri 15 Nov 2013 4:29AM

Absolutely!! I am a keen Loomio user!

As to your proposal, I don't understand it.
Can you put together a fact sheet/ presentation and prove your point? I don't see the point exactly...

SA

Steven Armstrong Fri 15 Nov 2013 6:20AM

If one buys a house to let and the mortgage interest payments exceed the rent then negative gearing allows that loss to be deducted from your other income, usually your wages. It equips property investors with more financial firepower than first home buyers. It also builds in to the fibre of the housing market the expectation of house price inflation. It encourages speculation not investment. It should only be available on new dwellings so as to encourage new construction.

It is a federal tax rebate so the states can't abolish it. So my proposal nullifies its advantage for the purchase of existing housing stock. It is a work around.

J

James Sat 16 Nov 2013 6:44AM

I agree with the fact that it should only be available for established dwellings however I think the "dwelling purchased only to let" will lead to workarounds as has occurred with first home buyers scheme. This scheme should be scrapped to lower the cost of new housing as a complementary measure.

LC

Lloyd Churches Mon 25 Nov 2013 11:51PM

I am against negative gearing but I don't think this levy on a rebate is the way to go. I also don't like the idea that they levy not be charged on newly constructed dwellings because at what point do you stop exempting the levy? If never for that property then we are building up a right to exemption. If we stop exempting when its sold to a new owner then it will be a disincentive to sell. In general this sounds like policy on the run. It's a federal govt issue, it should probably be handled by the fed govt and not a state government.

CL

Craig Lambie Wed 27 Nov 2013 10:59PM

I don't agree with your premise @Steven.

It will likely push up the price of rent to the point it is easier to buy a house than rent a place. No investor in their right mind would pay for a property outright to only make 4-5% return, especially when this barely covers the cost of capital.