No brainer. When people are at the top tax bracket being taxed 47c to a dollar earned, negative gearing is the main method used to reduce taxable income.
It doesn’t make as much sense for people on lower tax brackets to negatively gear, and are probably doing it because they don’t want to miss out. The benefit they get is marginal at best.
NewPhoneForgotOldAcc on
The Australian way is to never stop punching down.
Monkeyshae2255 on
Depends how you define “affluence”.
1) person owns a business reinvests dividends & doesn’t draw an income. Person/business owns 1 mansion, 2 Holliday homes, farm, boat & earns a marginal income – affluent or not?
2) Ie Lower incomes ie might be breaking even/positive gearing (hence you see many tenants are displeased about current rent expenses). If negative gearing was SUCH
a huge investment strategy rents charged would be less & rental supply would be higher.
3) more negative gearing creates more supply i) there’s always usually a loss incurred with rental property within the 1st 5-10 Years & so there has to be compelling reasons to build rental housing. ii) most current/future rental housing will be townhouses/units (running out of land), hence less chance of capital gain in the future as typically stand alones create greater capital gain than ie units.
3 Comments
No brainer. When people are at the top tax bracket being taxed 47c to a dollar earned, negative gearing is the main method used to reduce taxable income.
It doesn’t make as much sense for people on lower tax brackets to negatively gear, and are probably doing it because they don’t want to miss out. The benefit they get is marginal at best.
The Australian way is to never stop punching down.
Depends how you define “affluence”.
1) person owns a business reinvests dividends & doesn’t draw an income. Person/business owns 1 mansion, 2 Holliday homes, farm, boat & earns a marginal income – affluent or not?
2) Ie Lower incomes ie might be breaking even/positive gearing (hence you see many tenants are displeased about current rent expenses). If negative gearing was SUCH
a huge investment strategy rents charged would be less & rental supply would be higher.
3) more negative gearing creates more supply i) there’s always usually a loss incurred with rental property within the 1st 5-10 Years & so there has to be compelling reasons to build rental housing. ii) most current/future rental housing will be townhouses/units (running out of land), hence less chance of capital gain in the future as typically stand alones create greater capital gain than ie units.