It's easy to say your model won't significantly impact the housing crisis, but has your model been tested and validated? Does your model predict the crisis that eventuated in economies like NZ and Ireland where they removed negative gearing?
Do you honestly think that just because an ex rental hits the market that a renter can all of a sudden afford to buy it? At play is the "politics of envy"- a narrative from people with no vision or experience - just a nagging feeling that someone is better off than they are and need to be stopped! Your research has clearly neglected the following: The NZ market has had NG scrapped and due to its impact on rent are now going about bringing it back. Have people forgotten what happened here in the 80s under the Keating Govt with NG scrapped, only to see it re-instated within two years? Ireland also abolished NG some years ago only to end up today with a far worse rental crisis than here in Aus. NG was introduced way back in the 1930s when Australia faced a severe housing shortage with the aim to have people invest and generate an increase in the number of rental properties because the Govt's contribution in this space has been historically minuscule and nothing has changed as Govt's contribution is currently a paltry 10% or so. Then let the Govt deal with the millions of renters should you get rid of NG and CGT discount.
Agree, the Grattan Institute model is flawed. I'd like to see them apply their model to NZ or Ireland and see if it predicts the crisis that eventuated
A lot of this debate forgets that investors use their own savings and income to invest. Tax has already been paid on this money. Increasing Capital Gains Tax by reducing the discount effectively increases the tax on the money that was originally saved. If the government chooses to abandon the provision of rental housing and outsources it to the private sector - reducing tax incentives will logically make things worse not better.
You also buy shares with your own money that has already been taxed. The difference and problem is that CGT and Negative Gearing combine together letting you deduct losses whilst you own the asset and then letting you reduce tax on profit when you sell it.
@@PKPatty111 The same applies to a business you set up you could operate at a loss for many years. Losses can be deducted against other income. When you sell it at a profit the capital gain is reduced by the discount. Clearly the tax system has to provide an incentive for people to invest. The issue is if you take away the incentive for housing the rental crisis will be become worse. New Zealand has recently reinstated tax deductibility for interest paid on loans for investment properties. Brendon Coates did not mention this. I would not like Australia to make the same error Jacinda Ardern's govermment did.
@@sandymckinnon9220 a business is a productive entity that pays multiple taxes, generates productivity, and can employ others who also pay tax. A housing investment does not.
Unfortunately the government has chosen not to build houses for the people. Only about 4 percent of housing is provided by the government. The government builds hospitals freeways dams but so little housing. The provision of rental housing has been outsourced to the private sector. Correct investing in housing is not as productive as a business but it does provide an essential service. As such unless the government decides to build more housing tax incentives need to be retained.
Where the facts though? I just heard opinions. Most new investment properties are negatively geared at start. Then over time they become positively geared and of course that positively geared income gets taxed at normal rate for many, many years into the future. So it not all bad for govt coffers. It like an incentive to a new business. Regardless you take it away and investors leave market you will without doubt decrease number of rentals available so not sure where all our hundreds of thousands of new migrants the govt keeps letting in are meant to live. So it just a political football but will not improve housing numbers but instead increase rents 100% if it is removed.
Let’s all lose $1 to get $30c back from ATO. Sounds like a great investment strategy. Neg gearing helps with timing of when to offset the running costs. I can’t see how removing it will make property cheaper and affordable, if anything will reduce investment into new housing, reducing supply and getting houses more expensive
this guy crapping on about how little would change in property prices or investor behaviour, but then arguing that home ownership would significantly increase, this makes no sense
We need more housing, particularly for renters. if you really hate renters, keep making property investment harder and more expensive. I sold my properties and took the capital overseas. Well done. Less houses built and more people can't find rentals. I used to rent affordable properties in inner city areas, now I get a better return to do nothing. The renters I had to ask to leave were very upset, but you don;t really care do you? It is ideological i guess. With no skin left in the game i don't really care, just feel sorry for the victims of your extremist policies. renters.
Why should expenses in a business or other investment be tax deductable, but not on an investment property? You have totally overlooked the fact that come retirement, the people who invested in property are more likely to be self funded and not a burden on the government pension system. This is just Socialism by proxy and will just result in less people investing in property, and the problems that brings ie: less rental properties available, but will also result in more people being on a pension. Which is a bigger burden on a pension system already in trouble with an aging population. It will also result in more people being poor .. just what a socialist wants. How about identifying and removing wasteful government expenditure and make government more efficient?! God forbid that politicians take a pay or entitlement cut. Most of whom go on to very lucrative paying jobs after politics whilst still getting a pension and all the entitlements that they still get after leaving politics. None or which are means tested. This whole topic is just about removing the middle class in favour of having only two classes, the rich and influential and the poor or proletariat. On a side note, part of the reasons rents are so high is Land Tax. Of course it varies from state to state and situation to situation, but on average Land Tax in NSW equates to about $80+ per week per property. Here are some fact: 71.48% of investors hold 1 investment property. 18.86% of investors hold 2 investment properties. 5.81% of investors own 3 investment properties. 2.11% of investors own 4 investment properties. 0.87% of investors own 5 investment properties and 0.89% (or 19,920) of investors hold 6 or more investment properties.
The government should introduce more attractive multiple tax savings products to encourage investment beyond negative gearing. For example, infrastructure bonds could offer incentives such as a 10% tax offset on investments of $10,000 (providing a $1,000 tax benefit), with the investment locked in for the first ten years and tradable thereafter. These bonds should also provide a competitive dividend yield to attract investors. Funds raised through these bonds could then be used to finance infrastructure development. another example tax incentive on ELSS (equity linked share scheme) locked for first ten years like tax incenteive in indian tax system or investing in ETF
Negative gearing and capital gains tax must be grandfathered. If not, most investors will need to sell up. If not going to grandfather capital gains tax, they should let investors get a valuation and only pay the new tax rate on future growth from the valuation report.
Which bodies finance The Grattan Institute? The Grattan Institute is supposed to be non-aligned. If so, do all its contributions come from small, limited donations. Large donations would risk non alignment.
Why is the discussion always about negative gearing being removed as the saviour of the housing crisis? What about the fact that everyone who already lives here and anyone moving to Australia all want to live near the capital cities because that's where the work is. We are one of the biggest countries on the planet but for some reason we just shoehorn everyone into the same 3 cities pushing developments further and further away from the centre. Make more cities, create more supply. You shouldn't HAVE TO live near Melbourne and Sydney or risk a 2hour commute to work.
I don’t understand why you talk about forecasts and modelling when there are historical examples of what *actually* happens when negative gearing and cap gains are removed. Why are you so hell-bent on relying on your modelling of the future when there is historical precedence that you could refer to?
Only a small number of people buy houses for Negative Gearing, trying to genralise that we all do is stupid. I have 2 investment properties that were positive gearing for many years until the Goverrnmen raised the interest rates. Both my investment properties I built myself and the reason was to prepare for my retirement with my wife. We are not landlords because we want to get rich but because we don't want to rely on the governments help when we retire. All you people who try to make out we are evil are just plain stupid. I worked 3 jobs to buy my first home and provide for my family. Here's an idea, get off your couches and do something about your situation, being a professional victim seems to be the only thing this generation is good at.
Well said! You've worked hard for your retirement and the narrative out there is investors are somehow seen as a criminal class especially in the eyes of the Greens.
I am Gen X and am financially better off than most...and even I find the housing crisis a concern. The central issue here for the young is that house prices, relative to wages, have increased an order of magnitude. It used to be 3x, and now it's like 12x in Sydney, so getting a place is much, much harder than before. To be clear, I don't think it's helpful to "blame" landlords, for which I am one. My research indicates the housing crisis is a confluence of multiple factors such as falling interest rates, population growth and planning laws that obstruct housing development. I do blame the NIMBYs though, who might say "No villas in our postcode, it will destroy the character of the area"...which means the young pay a high price just so others don't have to live with change.
I was with you until you started attacking young people due to your biases. You’re comparing two completely different economies. The median house price in Australia is between $800 and $1000k. Saving a deposit is never going to be the same. I also worked three jobs when I was young and that was just to survive. Thank yourself lucky that you have the ability to earn more money than others due to being a man in higher paid employment. I know people way richer than you. Are you saying that you’re lazier than them?
"Abolishing negative gearing, reforming capital gains tax, and banning foreign buyers from purchasing residential property while encouraging them to invest in commercial property could help balance the housing market. Providing tax incentives for first-home buyers on their mortgage interest payments for the first ten years (similar to the U.S. housing policy) would promote home ownership, reduce demand for rental properties, and lessen the burden on taxpayers in the form of rental assistance. Additionally, 80% of newly released land should be allocated to first-home buyers.
Please tell everybody exactly how giving TAX incentives to INVESTORS buying ESTABLISHED HOMES adds ONE single NEW HOME to the supply of side of the CRISIS?????????Honestly disrespectful to families just wanting to BUY one single 'roof over their heads.' Shameful PONZI POLITICS. Bring on 2025🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘
It lowers the barrier of entry for one household to live an that established suburb. Instead of needing to front a deposit and pay for rates and insurance etc. They only need to pay for a fraction of the annual cost with the difference being subsidized two thirds by the landlord and one third by the government through negative gearing. In return, the tenant only just need to ask about putting pictures up on the wall, which most landlords would happily allow.
Unlike most wealthy countries, Australia's economy lacks both diversification and sophistication. Australia's primary exports are in low complexity categories such as mining and agriculture. 😂
The export complexity reports are flawed for your conclusion. It artificially skews heavily away from complex services such as IT and finance by wrapping them up as single categories each while focusing heavily on manufactured products, assigning byproducts of the same simple manufacturing pipelines multiple categories each. The export complexity report also excludes anything on the domestic economy so why would you use it to conclude Australia's economy lacks both diversification and sophistication. Under the ECI methodology of technology and research Australia ranks 13th and 4th respectively.
@@randomyoutubebrowser5217 In 2021: Australia was ranked 93rd out of the 133 countries included in the ECI ranking. Australia's ranking indicated it had less economic complexity (relative to other countries) than it did in the 2000s, when its ranking ranged from 66 (in 2007) to 81 (in 2009). ^ says you're wrong. Feels bad.
@@1986tessie Please read my comment again, and look at the report in detail. You're only seeing the export report. The export complexity reports are flawed for your conclusion. It artificially skews heavily away from complex services such as IT and finance by wrapping them up as single categories each while focusing heavily on manufactured products, assigning byproducts of the same simple manufacturing pipelines multiple categories each. The export complexity report also excludes anything on the domestic economy so why would you use it to conclude Australia's economy lacks both diversification and sophistication. If you go back and look at the methodology of technology and research (not exports) Australia ranks 13th and 4th respectively. If you're 38, you should know how to read and understand words. Feels bad.
I think you need to do a bit more research on the topic before making broad and ignorant statements like that. Here are some fact: 71.48% of investors hold 1 investment property. 18.86% of investors hold 2 investment properties. 5.81% of investors own 3 investment properties. 2.11% of investors own 4 investment properties. 0.87% of investors own 5 investment properties and 0.89% (or 19,920) of investors hold 6 or more investment properties,
@Ludo-logy I did know most investors own 1 - 2 properties that's fine. It's unfair for first home buyers to not be able to do it, arguably the most in need of it. Especially now, so many mortgage holders are in distress atm. But for people that have more than 2? No, that's bs. Pay your fucking taxes. And I did say people with multiple houses in op.
It's easy to say your model won't significantly impact the housing crisis, but has your model been tested and validated? Does your model predict the crisis that eventuated in economies like NZ and Ireland where they removed negative gearing?
Do you honestly think that just because an ex rental hits the market that a renter can all of a sudden afford to buy it? At play is the "politics of envy"- a narrative from people with no vision or experience - just a nagging feeling that someone is better off than they are and need to be stopped!
Your research has clearly neglected the following:
The NZ market has had NG scrapped and due to its impact on rent are now going about bringing it back.
Have people forgotten what happened here in the 80s under the Keating Govt with NG scrapped, only to see it re-instated within two years? Ireland also abolished NG some years ago only to end up today with a far worse rental crisis than here in Aus.
NG was introduced way back in the 1930s when Australia faced a severe housing shortage with the aim to have people invest and generate an increase in the number of rental properties because the Govt's contribution in this space has been historically minuscule and nothing has changed as Govt's contribution is currently a paltry 10% or so. Then let the Govt deal with the millions of renters should you get rid of NG and CGT discount.
Agree, the Grattan Institute model is flawed. I'd like to see them apply their model to NZ or Ireland and see if it predicts the crisis that eventuated
A lot of this debate forgets that investors use their own savings and income to invest. Tax has already been paid on this money. Increasing Capital Gains Tax by reducing the discount effectively increases the tax on the money that was originally saved. If the government chooses to abandon the provision of rental housing and outsources it to the private sector - reducing tax incentives will logically make things worse not better.
You also buy shares with your own money that has already been taxed. The difference and problem is that CGT and Negative Gearing combine together letting you deduct losses whilst you own the asset and then letting you reduce tax on profit when you sell it.
@@PKPatty111 The same applies to a business you set up you could operate at a loss for many years. Losses can be deducted against other income. When you sell it at a profit the capital gain is reduced by the discount. Clearly the tax system has to provide an incentive for people to invest. The issue is if you take away the incentive for housing the rental crisis will be become worse. New Zealand has recently reinstated tax deductibility for interest paid on loans for investment properties. Brendon Coates did not mention this. I would not like Australia to make the same error Jacinda Ardern's govermment did.
@@sandymckinnon9220 a business is a productive entity that pays multiple taxes, generates productivity, and can employ others who also pay tax. A housing investment does not.
Unfortunately the government has chosen not to build houses for the people. Only about 4 percent of housing is provided by the government. The government builds hospitals freeways dams but so little housing. The provision of rental housing has been outsourced to the private sector. Correct investing in housing is not as productive as a business but it does provide an essential service. As such unless the government decides to build more housing tax incentives need to be retained.
Where the facts though? I just heard opinions. Most new investment properties are negatively geared at start. Then over time they become positively geared and of course that positively geared income gets taxed at normal rate for many, many years into the future. So it not all bad for govt coffers. It like an incentive to a new business. Regardless you take it away and investors leave market you will without doubt decrease number of rentals available so not sure where all our hundreds of thousands of new migrants the govt keeps letting in are meant to live. So it just a political football but will not improve housing numbers but instead increase rents 100% if it is removed.
Listening to this while preparing my 2023-24FY taxes and calculating how much I'll negative gear across my portfolio
With the arguments for why don’t I get the same benefits for savings account and share profits?
Let’s all lose $1 to get $30c back from ATO. Sounds like a great investment strategy.
Neg gearing helps with timing of when to offset the running costs. I can’t see how removing it will make property cheaper and affordable, if anything will reduce investment into new housing, reducing supply and getting houses more expensive
this guy crapping on about how little would change in property prices or investor behaviour, but then arguing that home ownership would significantly increase, this makes no sense
What is so hard about understanding conversion of renters to home owners?
We need more housing, particularly for renters. if you really hate renters, keep making property investment harder and more expensive. I sold my properties and took the capital overseas. Well done. Less houses built and more people can't find rentals. I used to rent affordable properties in inner city areas, now I get a better return to do nothing. The renters I had to ask to leave were very upset, but you don;t really care do you? It is ideological i guess. With no skin left in the game i don't really care, just feel sorry for the victims of your extremist policies. renters.
Why should expenses in a business or other investment be tax deductable, but not on an investment property? You have totally overlooked the fact that come retirement, the people who invested in property are more likely to be self funded and not a burden on the government pension system. This is just Socialism by proxy and will just result in less people investing in property, and the problems that brings ie: less rental properties available, but will also result in more people being on a pension. Which is a bigger burden on a pension system already in trouble with an aging population. It will also result in more people being poor .. just what a socialist wants. How about identifying and removing wasteful government expenditure and make government more efficient?! God forbid that politicians take a pay or entitlement cut. Most of whom go on to very lucrative paying jobs after politics whilst still getting a pension and all the entitlements that they still get after leaving politics. None or which are means tested. This whole topic is just about removing the middle class in favour of having only two classes, the rich and influential and the poor or proletariat. On a side note, part of the reasons rents are so high is Land Tax. Of course it varies from state to state and situation to situation, but on average Land Tax in NSW equates to about $80+ per week per property. Here are some fact: 71.48% of investors hold 1 investment property. 18.86% of investors hold 2 investment properties. 5.81% of investors own 3 investment properties. 2.11% of investors own 4 investment properties. 0.87% of investors own 5 investment properties and 0.89% (or 19,920) of investors hold 6 or more investment properties.
The government should introduce more attractive multiple tax savings products to encourage investment beyond negative gearing. For example, infrastructure bonds could offer incentives such as a 10% tax offset on investments of $10,000 (providing a $1,000 tax benefit), with the investment locked in for the first ten years and tradable thereafter. These bonds should also provide a competitive dividend yield to attract investors. Funds raised through these bonds could then be used to finance infrastructure development. another example tax incentive on ELSS (equity linked share scheme) locked for first ten years like tax incenteive in indian tax system or investing in ETF
Negative gearing and capital gains tax must be grandfathered.
If not, most investors will need to sell up.
If not going to grandfather capital gains tax, they should let investors get a valuation and only pay the new tax rate on future growth from the valuation report.
Which bodies finance The Grattan Institute? The Grattan Institute is supposed to be non-aligned. If so, do all its contributions come from small, limited donations. Large donations would risk non alignment.
Why is the discussion always about negative gearing being removed as the saviour of the housing crisis? What about the fact that everyone who already lives here and anyone moving to Australia all want to live near the capital cities because that's where the work is. We are one of the biggest countries on the planet but for some reason we just shoehorn everyone into the same 3 cities pushing developments further and further away from the centre. Make more cities, create more supply. You shouldn't HAVE TO live near Melbourne and Sydney or risk a 2hour commute to work.
YES!
I don’t understand why you talk about forecasts and modelling when there are historical examples of what *actually* happens when negative gearing and cap gains are removed. Why are you so hell-bent on relying on your modelling of the future when there is historical precedence that you could refer to?
Only a small number of people buy houses for Negative Gearing, trying to genralise that we all do is stupid. I have 2 investment properties that were positive gearing for many years until the Goverrnmen raised the interest rates. Both my investment properties I built myself and the reason was to prepare for my retirement with my wife. We are not landlords because we want to get rich but because we don't want to rely on the governments help when we retire. All you people who try to make out we are evil are just plain stupid. I worked 3 jobs to buy my first home and provide for my family. Here's an idea, get off your couches and do something about your situation, being a professional victim seems to be the only thing this generation is good at.
Well said! You've worked hard for your retirement and the narrative out there is investors are somehow seen as a criminal class especially in the eyes of the Greens.
I am Gen X and am financially better off than most...and even I find the housing crisis a concern. The central issue here for the young is that house prices, relative to wages, have increased an order of magnitude. It used to be 3x, and now it's like 12x in Sydney, so getting a place is much, much harder than before. To be clear, I don't think it's helpful to "blame" landlords, for which I am one. My research indicates the housing crisis is a confluence of multiple factors such as falling interest rates, population growth and planning laws that obstruct housing development. I do blame the NIMBYs though, who might say "No villas in our postcode, it will destroy the character of the area"...which means the young pay a high price just so others don't have to live with change.
Well said mate.
I was with you until you started attacking young people due to your biases. You’re comparing two completely different economies. The median house price in Australia is between $800 and $1000k. Saving a deposit is never going to be the same.
I also worked three jobs when I was young and that was just to survive. Thank yourself lucky that you have the ability to earn more money than others due to being a man in higher paid employment.
I know people way richer than you. Are you saying that you’re lazier than them?
"Abolishing negative gearing, reforming capital gains tax, and banning foreign buyers from purchasing residential property while encouraging them to invest in commercial property could help balance the housing market. Providing tax incentives for first-home buyers on their mortgage interest payments for the first ten years (similar to the U.S. housing policy) would promote home ownership, reduce demand for rental properties, and lessen the burden on taxpayers in the form of rental assistance. Additionally, 80% of newly released land should be allocated to first-home buyers.
Get an investor on..
..
Landlords and housing investors need to shut up. Make tax incentives for investing in BUISNESSES, not an unproductive box like a HOUSE.
Please tell everybody exactly how giving TAX incentives to INVESTORS buying ESTABLISHED HOMES adds ONE single NEW HOME to the supply of side of the CRISIS?????????Honestly disrespectful to families just wanting to BUY one single 'roof over their heads.' Shameful PONZI POLITICS. Bring on 2025🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘🏘
It lowers the barrier of entry for one household to live an that established suburb. Instead of needing to front a deposit and pay for rates and insurance etc. They only need to pay for a fraction of the annual cost with the difference being subsidized two thirds by the landlord and one third by the government through negative gearing. In return, the tenant only just need to ask about putting pictures up on the wall, which most landlords would happily allow.
Introduce a phase out over 4 year period to allow time for people to adjust.
Unlike most wealthy countries, Australia's economy lacks both diversification and sophistication. Australia's primary exports are in low complexity categories such as mining and agriculture. 😂
The export complexity reports are flawed for your conclusion. It artificially skews heavily away from complex services such as IT and finance by wrapping them up as single categories each while focusing heavily on manufactured products, assigning byproducts of the same simple manufacturing pipelines multiple categories each. The export complexity report also excludes anything on the domestic economy so why would you use it to conclude Australia's economy lacks both diversification and sophistication. Under the ECI methodology of technology and research Australia ranks 13th and 4th respectively.
@@randomyoutubebrowser5217 In 2021: Australia was ranked 93rd out of the 133 countries included in the ECI ranking. Australia's ranking indicated it had less economic complexity (relative to other countries) than it did in the 2000s, when its ranking ranged from 66 (in 2007) to 81 (in 2009).
^ says you're wrong. Feels bad.
@@1986tessie Please read my comment again, and look at the report in detail. You're only seeing the export report. The export complexity reports are flawed for your conclusion. It artificially skews heavily away from complex services such as IT and finance by wrapping them up as single categories each while focusing heavily on manufactured products, assigning byproducts of the same simple manufacturing pipelines multiple categories each. The export complexity report also excludes anything on the domestic economy so why would you use it to conclude Australia's economy lacks both diversification and sophistication. If you go back and look at the methodology of technology and research (not exports) Australia ranks 13th and 4th respectively.
If you're 38, you should know how to read and understand words. Feels bad.
No negative gearing gor first home buyers but for rich people with multiple houses. Insane. 🤡 🌎
I think you need to do a bit more research on the topic before making broad and ignorant statements like that. Here are some fact: 71.48% of investors hold 1 investment property. 18.86% of investors hold 2 investment properties. 5.81% of investors own 3 investment properties. 2.11% of investors own 4 investment properties. 0.87% of investors own 5 investment properties and 0.89% (or 19,920) of investors hold 6 or more investment properties,
@Ludo-logy I did know most investors own 1 - 2 properties that's fine. It's unfair for first home buyers to not be able to do it, arguably the most in need of it. Especially now, so many mortgage holders are in distress atm. But for people that have more than 2? No, that's bs. Pay your fucking taxes.
And I did say people with multiple houses in op.