Comments on: What should you know about negative gearing before the 2019 Federal Election?

By: Concerned Citizen

Concerned Citizen — Tue, 28 May 2019 21:42:33 +0000

It’s the 29th of May and we have a Liberal government for another term, the best of a bad bunch.

Why can’t political parties just present the facts, as BMT have done, rather than spruke their sensationalist spin all the time? We may have more respect for politicians in general if there was less spin and more facts.

I don’t have an issue with the 9 May 2017 changes, claiming depreciation over and over again (every time the property was on sold to an investor) on the same asset was gilding the lily, though not by much. And claiming travel to see your investment property on the Gold Coast twice a year (between tenancies) could have been rorted.

But the governments of either persuasion, and the rental property investment nay sayers, never look at the full situation when asking “Do property investors benefit society generally or are they self serving leaches?”

1. Not everyone wants to buy a house, but everyone needs a house to live in, therefore rentals should be affordable.

2. Negative gearing is only negative because property investors are losing money putting a roof over someone else’s head. If investors weren’t housing people then the government would have to do it, (at much greater expense), and would increase taxation on all of us to fund more public housing.

3. There’s never any mention by the nay sayers now the government gives with one hand just to take much more away with the other. Properties don’t stay negatively geared for long but then when the property is sold the government gets your marginal rate on 50% of your capital gains and the ALP wanted 75%!

4. Does anyone have the data that shows how much the government invests by partially funding the shortfall investors incur (while putting a roof over someone else’s head) vs the capital gains income they receive from investors? e.g. $10K in negative gearing relief vs $50K in capital gains tax! And not having to have a massive social housing portfolio!

5. My 19 year old daughter bought a $400k house in the Canberra market 5 years ago, entirely on her own, while paying rent, entirely through hard work and dedication to the goal. Yes she worked two jobs, but she did it at 19! So don’t tell me it can’t be done.

6. There is going to be a massive transfer of inter-generational property and wealth from today’s baby boomers to the millennial’s. Labor wanted to get their hands on some of that as well!

7. Self funding your retirement is something everyone should aspire to, not having to beg the government of the day for crumbs.

8. If you can’t buy a house to live in where you work, then buy one to invest in (houses range in price all over Australia – there is something for everyone) and rent somewhere close to work. The best of both worlds.

9. Millennial’s, don’t expect to be given everything on a silver platter. Put in the effort and you will be rewarded, but shutting down negative gearing hurts everyone!

By: BMT Team

BMT Team — Tue, 21 May 2019 05:20:54 +0000

Hi Tash,

Thanks for taking the time to share your opinion. We appreciate your perspective.

Thanks,
BMT team

By: BMT Team

BMT Team — Tue, 21 May 2019 05:16:06 +0000

Hi Jo,

Thanks for sharing your comment. We certainly hope the market improves for you sooner rather than later. Make sure you claim all the deductions available to you. If you need help with your depreciation claim or have any questions, you can call and talk to one of our specialists on 1300 728 726.

Thanks,
BMT Team

By: BMT Team

BMT Team — Tue, 21 May 2019 05:05:50 +0000

Hi there,

Thanks for sharing your opinion. We believe the proposed negative gearing changes would see a further decline in housing prices across the board and decrease the available rental stock for tenants as investors withdraw from the market. This could increase rental prices and negatively impact both investors and tenants.

Thanks,
BMT Team

By: Jamie

Jamie — Fri, 17 May 2019 22:49:03 +0000

I’m in my mid 20s and have never had the opportunity to NG before. What bothers me is that if there is to be an abolishment of NG, it should be one that affects all existing investor properties at all. None of this grandfathering business. Sure, add on a transition plan of phasing it out so it doesn’t destroy retirement plans overnight, maybe phase it out over 5-10 years.

Obviously this won’t be popular with existing investors, but not doing so will mean that the newer generation will not have the opportunity the previous generations had with building a hard earned investment property portfolio. Change it all or don’t touch it.

By: Mm

Mm — Fri, 17 May 2019 21:57:02 +0000

Totally agree that it reads like an endorsement for LNP. My understanding is they are grandfathering existing investment properties anyway so won’t affect people who already own investment properties. So I find it hard to believe the doom and gloom you put forward. If housing prices drop to be more affordable this is excellent for young people and those who don’t own yet. This article seems to be reflecting privilege and wanting to hold onto privilege instead of encouraging equity for people

By: JoC

JoC — Fri, 17 May 2019 12:23:52 +0000

Hi All
We actually made the mistake of purchasing a rental property, as my husband is a self employed tradie (who is on less wages to 10 years ago) and as the retiring age keeps going up (as well as limits to adding to super fund), decided this was the way to go. We would have been better off taking out a loan putting half in a pile & burning it, rather than trying to be self funded retirees. This way we could have still had holidays and new cars, instead of getting 2nd jobs. People who rent can destroy a home, move on without consequences, go on holidays so can’t afford to pay the rent (agencies seem to support this)-but that’s another story.
Now does everyone realise that it’s our AFTER TAX MONEY going into these properties. If you are negative gearing, life is tough. All the income is added onto any job earnings & is taxed. We spent 40k of our AFTER TAX money completely renovating a property (after tenants destroyed it-yes it was rented through an agency) for someone else to live in. We cannot claim that money in the year we spent it, but can claim depn costs over several years, however any income in the year must be declared, so yes more tax. So we feel it’s a lose, lose situation.
If investors pull out of the market, rents will increase – which for us would be great. I think Rod Colley made a valid point in regards to first home buyers (though don’t think pensioners should be punished-they built the country & super wasn’t around then). My first home wasn’t new, wasn’t in the best suburb and wages and interest rates weren’t what they are today. I certainly wasn’t let off paying stamp duty because it was my first home and had to work very hard and go without to achieve it. Why punish the hardworking people, so the lazy or spoilt ones can have it all. Without investors, they’d be plenty of homeless people as loads of these don’t qualify for Govt housing. Although lots of people rent by choice.
Not sure why everyone is concentrating on investors. I personally don’t know anyone out there who has purchased a property who wants the market to drop anymore. Pretty hard to take when you purchase a property for $400K and is only now worth $320K or less, so it’s not only Investors affected-it’s all home owners.
It’s a myth that Investors are rich (really starting to think we could have been well off if we didn’t invest & worry about the future). Has anyone taken into consideration that negative gearing has increased due to the market crash? So less rent = less income, but it doesn’t decrease expenses like rate rises, insurance or maintenance costs. Rents might be cheaper but all other costs increase. I personally don’t know anyone who invests to make a loss – especially in our income bracket. Steve Bayley’s post 16/5 states it better.
At the end of the day, we are stuck with this property, as can’t afford to chuck away $100K (renovations + value loss). So maybe after 10 years with all the grief, debt and stress we might make $10-20K. Think would have been better off putting the money under the bed………..

By: Tash

Tash — Fri, 17 May 2019 11:08:43 +0000

The scare tactics are from the Labor party who demonize investors & property owners. Negative gearing has not been explained properly to the general public. It is not for the “Top end of town”. My daughter is a university graduate who was on about $50k gross when she started and now after 10years is on about $80k gross including superannuation. She moved back to live with us and saved very hard for a deposit, and was able to borrow from the bank to buy a modest property that she negatively geared by renting it out. When she could afford to move into it, she did, & it became her home, to this date. Negative gearing is a great mechanism for someone on a low income to buy their first home, with the small sacrifice of living with their parents. If you don’t have a job due to a badly performing economy, nobody will give you a house and no bank will lend you money. I don’t know what magic wand Labor think they will wave to give young people a house. My parents lived through the depression and saved hard and purchased their first home in their 40s and paid it of before they were 65 with hard saving (as labourers). Many young people are led to believe by Labor their first home will realize without a job. They also want to have the best house in the expensive trendy areas of the inner city, rather than going to more affordable alternatives. Also, investors are not a charity and will not go into risky debt, with high costs such as land tax, maintenance & repairs etc and end up with bad tenants that are generally being supported by the rental unions & tribunals. It could take 6 months to a year to get these out, with the property left in disrepair. The problems are endless, so if Labor gets in, Investors will go elsewhere and even overseas. They will leave property to the public housing system to supply housing. The flow on effects of the destruction of the building industry will affect everyone down to even the local milk bar.If there is no business investment, there is no employment. Look at Singapore with no resources, but a booming economy, due to government tax relief. It is even taking away industry from Australia. Dow Chemicals & others, left Australia to go to Singapore. If industry is not supported, we will end up being a third world country. So if Tax relief is not given to our industry, there will be no industry. Labor can go ahead and provide highly taxpayer subsidised child care other subsidies, that no one needs, as they don’t have a job to go to. If Labor gets in, its time to move to NZ.

By: BMT Team

BMT Team — Fri, 17 May 2019 06:44:12 +0000

Hi Brendan,

We will have to wait to see the draft legislation for all the finer details. At this stage, we know Labor’s plan would limit negative gearing to new housing from 1 January 2020. All investments made prior to this date will not be affected by the changes and will be fully grandfathered. The changes will also halve the capital gains tax discount for all assets purchased after 1 January 2020. This will reduce the CGT discount from assets held longer than 12 months from 50 per cent to 25 per cent.

Thanks,
BMT Team

By: BMT Team

BMT Team — Fri, 17 May 2019 06:30:38 +0000

Hi Greg,

Thanks for your opinion, we always welcome feedback. We believe the economic flow on effects to the property market could include a further decline in housing prices across the board, less second-hand housing stock on the market and a decrease in rentals which could increase rent prices for tenants.

Thanks,
BMT Team