The debate over one of Australia's most controversial tax policies is seriously heating up.
It's difficult to measure the impact that Negative Gearing has had on the property sector although The Property Council of Australia has released some interesting facts about Australia's investors:
- Property accounts for 11.5% of Australia's national wealth and creates jobs for 1.1 million Australians.
- 1.9 million Australians own an investment property.
- 840,000 Australians with taxable incomes below $80,000 a year, negatively gear investment properties.
- The above figure includes 53,800 teachers, 52,000 retail workers, 35,900 nurses and midwives, 22,600 hospitality workers and 10,400 emergency services workers.
The question is, does Negative Gearing fuel the housing affordability crisis in the Australian property market?
Following on from that are many other queries. If Negative Gearing was to be removed and property prices declined, could we expect to see more international buyers competing in the market?
What percentage of investors would increase rent to cover their losses and would this further impact first home buyers who are in the process of saving for their home deposit? Will first home buyers receive the jolt they require to boost the economy or will it rule out potential investment opportunities in their later years?
Some further thought goes to those that have just entered the market and the impact that this would have on any equity they have built. If home values decline, equity will also decline which in some cases could make the home less valuable than the Home Loan. There’s also those who purchased an investment as their first home to get into the market while renting where they hoped to one day live.
We would love to know your thoughts on the suggested removal of the policy. Head over to the Let's Finance Facebook page to have your say.
- Would it impact you?
- Do you feel that it would be beneficial or detrimental to the overall property sector?