Is there really a lack of housing in capital cities though? Genuine question, I live rurally
One thing that I don't quite understand is why some people think negative gearing is a good thing for your personal finances... Yay let's intentionally lose $1,000 a month so I pay $350 less tax!!! Of course that's great if your property is going up in value by more than $650 a month (plus whatever the agents fees will be to sell it and whatever you paid in stamp duty when purchasing the property - which can be a lot) but outside of Sydney and Melbourne that's just not happening. When the market in Sydney and Melbourne slows down and the younger investors start settling down and having children, watch them drop these houses fast when they are on a single income and need that $650 a month to pay for nappies.
So an example:
A LL's mortgage is $2000 a month. He has a tenant in there paying $1500. He's making a loss of $500 a month. He neg gears and gets back say $150-200. He's still making a loss on paper of 300 a month right?
But his 2 grand mortgage is being paid for essentially 300 a month with some possible expenses for the tenant.
That's a pretty sweet deal....
Wise Enough (11-05-2016)
that's an important distinction here, I hope everyone reading along gets that too?
Ultimately renting out and NG is a sweet deal, or people wouldn't do it. Why rent out your house if you aren't getting significant gains?
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