- Will the budged be improved?
If we are to believe Labor’s forecast of $32Bn in savings over 10 years, Treasury must have predicted some significant increase in interest rates from years 6-10 right?
But let’s face it….Treasury can get it wrong – remember its forecast for iron ore prices? It was totally optimistic.
- Improve housing affordability
Increasing the demand for new homes (because they can be negatively geared) will increase their price.
- State Governments lose
Whilst the Government may, in the long term, claw back some revenue if this policy is implemented, if property transactions decline, the States are going to be significantly impacted by way of stamp duty collection.
- What about shares..
Labor has also proposes to cut negative gearing on new share investments. This leads to a whole bunch of questions such as:
a) Are we talking listed only or unlisted?
b) How are super funds treated? Family trusts?
And back to property…
c) What if I buy a commercial or industrial building?
- Do politicians understand negative gearing?
NEGATIVE GEARING as it implies, means losing money. If your costs of maintaining a property exceed the rent paid then you can claim this as a tax deduction (e.g. A $10,000 loss may save you between $2,000 and $4,000 in tax depending on your marginal tax rate…
However.. YOU ARE STILL LOSING MONEY!!