Premier reignites debate over housing affordability, negative gearing 3

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You might have heard over the weekend about a NSW Liberal MP speaking out about negative gearing.

The state planning minister Rob Stokes said in a speech on Friday that he didn’t think negative gearing did anything to boost housing supply in places like Sydney where it was needed.

He went on to say it helped some reduce their taxable income “at the expense” of others.

“Why should you get a tax deduction on the ownership of a multimillion-dollar holiday home that does nothing to improve supply where it’s needed?” he  said.

“We should promote investment in the type of housing that is needed by the burgeoning populations in cities like Sydney.”

His comments were dismissed by Prime Minister Malcolm Turnbull and other Federal Liberal colleagues.

But, the Guardian reports his premier, Mike Baird, has actually backed him up.

Speaking at the National Press Club yesterday, Baird said he hoped policy makers would listen to Stokes – who he described as “incredibly credentialed”.

“He’s an incredible asset to the state and he was making a contribution to one of the biggest policy challenges we have – housing affordability,” he said.

“I know that partisan politics is a brutal reality but I think we need to do more as leaders to try to get to a position.

“Don’t immediately pick up your political badge. Just don’t do it. Just stop and say, ‘Well actually there’s some wisdom in this, it might not have come from my side but, you know, that actually is something that we should consider as part of the overall mix.’ My hope is that’s what we do more of.”

Baird’s comments prompted the issue to come up in Question Time in Federal Parliament, with Opposition Leader Bill Shorten asking the Prime Minister if the government would stick by its position to rule out changes to negative gearing.

The Guardian reports that he didn’t get an answer.

The negative gearing debate has been raging between the two major parties since before the July election, with Labor pushing for change and the Coalition arguing against it.

But if you’re confused about exactly what negative gearing is, here is a quick explanation.

Negative gearing occurs when you take out a loan to buy a home, but the interest you pay is more than what you’re making in rental or other income from the home. Basically, you’re making a loss. 

According to statistics, negative gearing reduced personal income tax revenue in Australia by $600 million in the 2001/02, $3.9 billion in 2004/05 and $13.2 billion in 2010/11.

Those arguing against the changes argue it benefits wealthier Australians more, while those in favour of negative gearing argue that it benefits the middle class more.

What do you think about this issue? Is Premier Mike Baird and his planning minister right?

 

 

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  1. What an idiot this guy is !!

    No-one gets a tax deduction on a million-dollar holiday home !! Or any holiday home for that matter. It is only property that generates taxable income that negative gearing applies to. Of course you can claim some deductions incurred in the generation of that income the same as any other kind of income or enterprise !! If it wasn’t for the mums and dads taking a big risk by investing in rental properties who do you think would supply the housing for those who can’t afford or don’t want the responsibility of owning there own home ?? Certainly not the Government.

    Negative gearing usually only applies to the first few years of ownership then it becomes positive and they don’t mind raking in the tax on that money !!
    This man really doesn’t understand the topic so he is best not to comment at all.
    A loss on a business enterprise is a loss…money gone out of your pocket and into a black hole. Why should these losses only be allowed for companies and not ordinary mums and dads and wage and salary earners generally.

    Many people I know have used this strategy to build their retirement savings rather than trust all their money to superannuation fund managers. And most of these people will never draw an Age Pension so will never be a burden on the taxpayer despite still paying considerable tax even in retirement.
    How many ways do these pollies want to screw the older generations ??

  2. My Motto has always been .. “If you know nothing or very little about the subject, say nothing…. absolutely nothing”

    I am just wondering, and no doubt someone will put me right, I am just wondering if my memory is correct. My memory tells me that some years ago negotiations between the State governments and the Howard Federal Government re the introduction of the GST, the States agreed to remove Stamp Duty. If I am correct, I wonder how much longer it will be before that negotiated arrangement will be honoured ????

  3. Negative gearing is for an investment rental and should be treated the same as any other business, i.e. claim deductions against profit and pay tax accordingly.

    If in debit for some years, the debit carries over until profit is made.

    Over time, the ATO i.e. taxpayers, may well benefit.

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