Go to content Go to menu

Should Negative Gearing be abolished?

The Questions that need to be asked are NOT about the Wealthy paying more tax, it is about what are the Ramifications of getting rid of Negative Gearing and who will be affected, and it is not the Wealthy, and some of these Journalists need to start asking better questions.

Here are a few Questions needed to be consider about Negative Gearing.

A 2016 article showed that from an average $450,000 new home, (Constructed) there was about $180,000 in tax which went to the Three Levels of Government. When a person on $100,000 saves less than $5,000 per year on tax, isn’t the government way ahead on tax and if one person does not buy a NEW home because Negative Gearing is stopped, isn't the Government worse off by $175,000 even though it may have saved the $5,000 it did not receive the $180,000? Either my Maths is way out or the Government is missing the point, they should be encouraging people to buy NEW homes to rent out rather than taking away Negative Gearing, certainly take it away on old homes as they do not cause anyone to be employed from the building industry, not do they create jobs, they do not even add to the supply to help bring down rents as they are already part of the supply. So by all means take away negative gearing and tax deductions if people buy an established home to rent out, but they should be encouraging people to build and buy new homes to rent out. There should also be a cap on the value of homes you can do this two 120% of the average value of a home as adding multi million dollar mansions for rent is not helping low income families. 

When Negative Gearing was taken away back in the 1980s, this increased the rent on cheap properties because the landlords could not afford to pay the mortgages without the added tax benefits. As such the Low Income earners were affected way more than the wealthy and this was never the intent.

When Negative Gearing was taken away in the 1980s - the waiting list for Public Housing increased from 4 years to 14 years within a few months because of the escalating cost of cheap rental homes and the question here is, isn’t it cheaper for the Government to give a $5,000 tax deduction and receive $180,000 in New Taxes than to have to build a Government home for $450,000 to house them?

Who will provide the low income housing if Negative Gearing is taken away?

How would the tax income from the 100,000 homes be replaced if the Government takes away Negative Gearing? Getting Tax from 100,000 homes at $180,000 each is $18 Billion a year, and that money needs to come from somewhere, and one way or another that is coming from the people and businesses that the government can tax, so it will come from somewhere.

How many jobs would be lost from the Construction industry, and how will they be replaced?

How could Low Income Earners Afford to pay more in rent if rental properties become more expensive because of lower tax incentives?

Clearly the Journos want to help, but they need to answer these questions before they start suggesting that we need to get rid of Negative Gearing as it is the Low Income Earners, the Middle Class and the Tradesmen that will be far more affected than the Wealthy.