Powered by MOMENTUM MEDIA
realestatebusiness logo

Breaking news and updates daily. Subscribe to our Newsletter!

Home of the REB Top 100 Agents
Breaking news and updates daily. Subscribe to our newsletter

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Latest


Must Read


PM Tech Growth Sales Marketing Industry

Our Events


New Broker Academy 2022

The Adviser’s New Broker Academy aims to equip prospective brokers with the knowledge, skills and mindset to succeed...

LEARN MORE
VIEW ALL
Do you have an industry update?

top suburbs

12 month growth
Box Hill
127.02%
Mollymook
82.85%
Brightwaters
79.93%
Cleve
78.13%
Bawley Point
76.2%
Murrays Beach
75.57%
Terranora
70%
Crescent Head
69.38%
Park Ridge South
68.32%
Mollymook Beach
67.09%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.

rpm logo latest

Time’s up for negative gearing?

By James Mitchell, John Bastick
16 October 2014 | 1 minute read
Gearing

A leading economist has called on the federal government to end negative gearing to limit the potential damage of a dangerously overheated investor market.

The Bank of America Merrill Lynch’s chief economist, Saul Eslake, said the controversial property tax should be “grandfathered” – continued for those who currently use it and banned here on in for everybody else.

Neither was Mr Eslake a fan of the RBA’s mooted changes to lending laws – where investor borrowing limits would be curbed – saying they wouldn’t work or, worse, would hurt those who are not the source of the problem.

Advertisement
Advertisement

He said ending tax concessions through negative gearing going forward was the “simple answer” without impacting those who already use it.

“If you grandfather it so that you’re not taking it away from the 15 per cent of the electorate who has it, then my view is: what’s the problem?” he said.

Mr Eslake agreed that the biggest hurdle to eliminating negative gearing was convincing politicians they wouldn’t be walloped at the ballot box by furious investors.

“If the government or the opposition were to present it properly, nor should there be a political backlash because they are not taking a privilege away from anyone who is currently enjoying it,” he said.

However, senior economist at the Domain Group, Dr Andrew Wilson, believes negative gearing is so entrenched, and that the pros so outweigh the cons, that it’s here to stay.

Dr Wilson believes investors build the dwellings governments used to and “as investors, there are no guarantees that you’ll get your tenant, you’ll get your yield, you’ll get your cash flow, or your capital growth” and they should be duly compensated for that with tax concessions.

“If there’s no incentive the property market would be dead,” Dr Wilson told Residential Property Manager's sister title, The Adviser. “Investors would take their money to equity markets or gold or stamp collecting.

“The argument against negative gearing is nonsense; sure they might tinker with (the laws) at the edges, but it’s here to stay,” he said.

Time’s up for negative gearing?
Gearing
lawyersweekly logo

ABOUT THE AUTHOR


Listen to other installment of the Real Estate Business Podcast
Do you have an industry update?

top suburbs

12 month growth
Box Hill
127.02%
Mollymook
82.85%
Brightwaters
79.93%
Cleve
78.13%
Bawley Point
76.2%
Murrays Beach
75.57%
Terranora
70%
Crescent Head
69.38%
Park Ridge South
68.32%
Mollymook Beach
67.09%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.