Expert Advice with Tyron Hyde
In the month’s QS Corner - why I’m being a Negative Nancy.
I’m trying not to be negative about Negative Gearing - but i can’t help it!
There are two main reasons I think changing negative gearing(NG) right now is dumb:
1. The Labor policy was conceived at a time when property prices in Sydney & Melbourne were going through the roof. NG was often blamed for the exorbitant prices being paid and in turn keeping First Home Buyers out of the market.
Fast forward to now and the property markets have shifted significantly.
Buy squashing NG this will lead to less investors, which will lead to less demand which will lead to a further downturn in the market.
This could lead to to a reduction in consumer confidence and spending which will affect the overall economy.
2. With new property being exempt from the changes - it could encourage property spruikers to come out of the woodwork and prey on the less experienced investors by showing them the tax advantages that will apply to buying only brand new.
I would favour a system where, if the rent received on a property is less than the mortgage payment on that property - that loss is no longer deductible. Fees like property management, insurance and body corporate fees would still be tax deductible.
Tyron Hyde is the CEO of Washington Brown and is considered one of Australia’s leading experts in property tax depreciation. He is also a registered tax agent. Washington Brown manages construction costs worth over $2 billion and completes 10,000 schedules annually. For a depreciation schedule quote CLICK HERE and follow the 3 simple steps or estimate your depreciation cost.
The Washington Brown Free Depreciation Calculator will give you an estimate of the depreciation deductions you could claim on your investment property
Read more Expert Advice articles by Tyron
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.