I don't know. To me in the end, we all do what is best for ourselves and our families. We don't always consider the bigger picture.
The basic premise of housing affordability comes down to "Supply and Demand".
If there are more properties available than buyers to buy then the price goes down. If there are more buyers than sellers then prices go up. With population growth there has not been enough land made available with effective public transportation and services planned and provided to keep up with demand.
The State governments particularly in NSW have failed completely at managing land availability and services for that land to keep up with growth.
Changing the negative gearing won't change the upward trend of property value as the demand for property far outweighs the supply. As long as this is true property prices goes up which makes them attractive investment for investors looking to grow wealth for retirement.
As mentioned before investors will first look to counter the loss of return by increasing rent so investors will not lose out if negative gearing gets removed.
There is only one way to make property cheaper and that is an increase in supply. I don't think the right way to do it is by trying to "push" out investors but rather improve services such as public transport and release public land for development. This way families get a homes and investors get to provide for themselves in retirement.
I'm on mat leave currently and am on a payment plan for last year's tax debt. I've got the money to repay in full but why should I? if I can negotiate an interest free loan with the ato, why would I not take it? anyway I'm hoping for/expecting a refund this year so whatever refund I get will pay off the remaining tax debt and I intend to put any excess into my hecs debt as I want to keep repaying it. if I miss a repayment now it'll just get indexed again and I'll have effectively thrown last year's repayment in the bin. I don't feel I'm irresponsible by not making repaying my hecs my #1 repayment. it's an interest free loan and I'm not doing anything illegal. I'm also not going to be stupid though and give money to the ato that I might need in an emergency.
allowable deductions include:
interest on borrowed funds
depreciation/capital works write offs
all the other usual running costs associated with a property - council & water rates, body corporate fees, agent management fees, gardening/cleaning, repairs and maintenance etc
interest is usually the biggest deduction.
I think that the upward pressure on property prices would be less problematic if first home buyers were not having to compete with investors who have a wealth of equity behind them and a view to negative gearing. All of the competition for entry level housing gives vendors the motivation to auction properties to capitalise on the competition, rather than listing at a set price.
And don't get me started on investors buying and flipping houses to sell with a cheap renovation and increasing the property prices. But that's a separate issue.
This is what I mean by government being able to do both (help with affordability AND keep current NG and CGT discounts so those who aren't super rich but want to invest for the future (and not rely on the government in retirement) still can do so profitably.
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