this post was submitted on 03 Aug 2023
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Greens decry property tax breaks costing 78 times what Labor proposes to spend on social housing (www.theguardian.com)
submitted 1 year ago by [email protected] to c/[email protected]
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[–] [email protected] 0 points 1 year ago (2 children)

How would you get rid of negative gearing? You couldn't do it instantly, all at once. People have made financial decisions based on it. You could say "no negative gearing on properties purchased after 2023", but then you would still have a huge problem of existing negative gearing. You could phase it out. Limits on how much you can negative gear that reduces every year, going to zero in 20 years.

[–] [email protected] 0 points 1 year ago (2 children)

It's a funny beast, but I don't know that getting rid of it is the right call. I don't think it'd chage anything much:
Ms Jones has a house that she leases out to tenants. The interest on the mortgage and costs on the hosue amount to more than she collects in rent. That difference is tax deductible under the status Quo (Negative Gearing). The law changes, and you can no longer negatively gear property.

Ms Jones starts a new company (TotesLegitLandlord inc) and sells her property to this company that she happens to own. This company leases out a house to tenants. The Interest on the business loan and the costs on the house amount to more than the company collects in revenue. The company makes no profits and pays no tax.

Negative Gearing just makes this whole process easier for everyone. Tax returns are easier and the ATO isn't reviewing several thousand small businesses that are leasing out properties at a loss. It's a bogeyman talking point getting us arguing with each other while Billion-dollar companies transfer all their profits off-shore and pay no tax. That's the scandal that we should be marching in the streets over.

[–] [email protected] 0 points 1 year ago (1 children)

I think if the company makes no profit and pays no tax that's fine. The problem people have with negative gearing is that it offsets non investment income. So Ms Jones now pays less income tax on her salary.

[–] [email protected] 0 points 1 year ago (1 children)

It offsets personal income by the difference between what the property costs and what it brings in for rent. We need an accountant to chime in here. If Ms. Jones invests money into her business to keep it going (since costs are outweighing income), is that money still income? Or would it be deductible as well?

Either way, that amount isn't a going to be more than the rental income. And under either model the rent income isn't taxed until the property is generating more rent than its outgoings. Once that happens, it's time to buy the next property and go back into the red. It feels like s ponzi scheme, doesn't it?

I see the problems. I just don't know how to fix them.

[–] [email protected] -1 points 1 year ago

You don’t seem to see the problem at all, the goal of removing negative gearing is to force people to sell, what that means to their personal finances is immaterial

[–] [email protected] -1 points 1 year ago

That’s why you also need to reform the corporations act to ban corporate ownership of residential real estate.

[–] [email protected] -1 points 1 year ago

Give until the end of the financial year. Negative gearing is a speculative investment, if you’re negative gearing your only residence then more fool you.

[–] [email protected] 0 points 1 year ago (1 children)

Fuck I really hate Labor.

I can’t wait for a left wing party to be in charge of this country again for once.

[–] [email protected] 0 points 1 year ago (2 children)

Its funny for me being from america. Labor sounds so much like it should be left wing. Although they might be relative to our crazy right leaning everything.

[–] [email protected] 0 points 1 year ago (1 children)

That's because US politics is ridiculously conservative compared to Australian politics. Some have even argued that our major conservative party, the Liberal Party, is actually more left-leaning than your Democratic Party.

[–] [email protected] 0 points 1 year ago (1 children)

Yeah democrats are definately center and I would say mostly right of center but they do have some generally progressive folks but the party is very broad across the spectrum. Our republicans I can't even call conservative now as they seem to be in some sort of internal competition with each other on who can be the craziest.

[–] [email protected] -1 points 1 year ago* (last edited 1 year ago)

No, absolutely not. The Democrats are hardline fiscal neo-conservatives and on social policy are generally pretty conservative(even had a non-Christian leader?).

You don’t seem to appreciate that your right wing is literally charging into the Hitler/Mussolini/Stalin ballpark right now… they’re so far off the normal spectrum it’s like watching a movie.

[–] [email protected] -1 points 1 year ago

Your left wing is WAY more conservative then out right wing… and our right wing is pretty out there