Would it just mean that people would hang on to their family home longer, riding it out until the market naturally increases? And it would be counteracted by their next purchase also being cheaper?
Sorry, I don't know if that makes sense. I'm thinking out loud and I'll blame it on my lack of sleep 😁
I think there'd definitely be incentive to hang onto what you've got and ride it out so to speak.
I support it's removal after maybe one property. A lot of research shows that while the first home buyers falsely elevated housing pricing that the bulk of the insane inflation on prices is investors. Many of who are mum and dad investors who are in completely in over their heads who don't maintain the rental properties.
The average joe is struggling to even access the buyers market now bc investment properties are so attractive to investors. And to add more complexity, the fact so many of us can't afford to buy means we rent, which means rental demand is very high. Which means the same landlords who have forced up prices and won't fix my house are also further profiteering by charging ridiculous rental prices bc demand *is* so high. This means not only the principle amount too high, many can't save for a deposit bc we are being fleeced in rent.
I'm well aware there will always been a demand for rentals. But negative gearing among other things is making it too difficult and very unfair to first time home buyers.
I liked the proposal that was in last week's episode of q and a. Basically if you already had properties negatively geared you could keep them like that, but any new purchases could only be negatively geared if they were new homes.
The idea being demand would decrease for existing properties, prices would correct and enable first home buyers to get in to the market. This would also encourage development, as more investors would be purchasing new properties.
Theoretically this would be win win
I'm with other pp,s who think it should be capped at 1 or 2 investment properties
We manage approx 250 rental properties , most are mum and dad investors and only 5 of our landlords have 2 rentals , 1 has 4, this is in suburban sydney - we don't have a lot of new investors coming into our market as the returns are just not there - our average sale price for a house is $1,325,000 and our average rental price is $700 , the rents just can't keep up with the capital growth
I do believe there will be a surge in buying if the proposal goes through ( it was mayhem when they stopped the first home buyers grant) but I don't really think sale prices in our areas will be effected long term but the rentals are in big demand now so yes Id guarantee they would go up as there would be no new investors ( suburbs with lots of units however I think will see a big price drop as investors seem to favour them so first home buyers would win with units but not houses)
SSecret Squirrel (21-02-2016)
Someone mentioned keeping new houses as eligible for negative gearing but not established houses. Thing is you get higher rates of depreciation with new builds as you can depreciate more of it.
I'm not sure what the solution is, but there has to be a balance. I also think that labours plans to reduce the discount on capital gains is just punishing investors because we aren't struggling Australians. If I make a profit on my investments, why should I have to pay more of my profit in tax? I understand that negative gearing means the tax system will keep more money by offering less refunds, but I don't believe investors should have to pay higher taxes.
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