Luma

What would happen there was no longer negative gearing in Australia?
- I guess investment properties wouldn't be so attractive anymore

Why does Australia have negative gearing anyway?

renth

I believe it's so governments don't have to spend so much on social housing.

Swerv-o

As I understand it, the premise behind negative gearing is that by offering an incentive to make a loss on your rental income, it means that rents aren't so high, and it then follows that there is less pressure on the powers that be to provide social housing for those on low incomes.

Whether it works any more is indeed arguable - certainly in Sydney demand is far and away outstripping supply, and desperate renters are pushing prices up.

I don't think that they will abandon it, at least in the short to medium term for two reasons:

The first is that if they then apply full market forces to the investment property market, it will likely drive rental prices much higher than they currently are.

The second is that the federal government has a vested interest in keeping investment properties viable for retirees income streams - There is now lots and lots of super money tied up in investment properties. If the bottom falls out of the market, and super values take a massive hit, then there will suddenly be a lot of people demanding the aged care pension, which the government can ill afford at the moment.

That's my 2c anyway.


S

Beoz

Totally agree

..... and I'll add one more thing. All the politicians have investment properties. They aren't going to sabotage their own nest egg.

Amazulu

No

System is fine as it is

NickyC

They did abolish it once.

The Labour government removed it in 1985. Rentals promptly dried up and what was available cost a fortune.

They brought it back in 1987.

chris955

No they wont abolish it. Its ridiculous especially if it intended to keep rents down, that seems to be working well. No Government would have the guts to abolish it as they all have their snouts in the trough.