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Conversely, a very foolish policy in Australia is negative gearing, which IMO is one of the major reasons behind the property bubble. See http://en.wikipedia.o
by jbarham 15y ago
Conversely, a very foolish policy in Australia is negative gearing, which IMO is one of the major reasons behind the property bubble. See http://en.wikipedia.org/wiki/Negative_gearing_%28Australia%29 http://en.wikipedia.org/wiki/Negative_gearing_%28Australia%2... for details.
- brc 15y agoNegative gearing seems to be a whipping boy for all sort of ills. The fact is in the USA most people can claim their mortgage payments interest as a tax deduction - which is more bizarre. I agree it's a stupid strategy, but it's plain foolish to think that negative underpins property investment. If you removed it, in the short term there would be a dip in property investment, but this would only work towards creating a further supply shortage. Negative gearing isn't a tax ruling - it's an investment strategy. Businesses use the tax deductibility of interest payments as a legitimate expense, so it's difficult to argue why this should be different for individuals.
- coenhyde 15y agoOnly 1 out of 10 negatively geared properties is for the construction of a new property. The rest is for the purchase of existing stock. The problem with negative gearing in the context of a tax deduction on housing investments is that it encourages speculation by reducing the losses on bad investments. This is why we have such a disconnect between housing prices and rental prices.
- mahyarm 15y agoIt is bizarre, but as far as I know the tax deduction is limited to your personal residence, while negative gearing is more open to speculative investing.
- motherwell 15y agoYou HAVE TO have negative gearing - and it isn't like a family home is tax deductible!