10 Apr 2017

Negative gearing is … a subsidy for buyers

This is the elephant in the room and the government is blind, they bury their heads in the sand and hope no one notices. All they do is pass the blame onto the supply side, this is grand stupidity!
Negative gearing is … a subsidy for buyers … The problem is one of too many buyers willing to pay high prices, and negative gearing is designed to create more buyers willing to pay more.
So negative gearing encourages people to invest in property, and it particularly encourages them to invest by borrowing most of the price of the house … This is a very odd kind of housing and investment policy, seemingly designed to encourage people to over-extend and expose themselves to big risks if property prices were to fall.
Capital gains tax is “diverting capital from other productive investments in the expectation of tax-free capital gains”.
Lopsided lending for private housing has diverted finance away from business investment.

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