Negative Gearing: Why It Should NOT Be Scrapped
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Negative gearing has been a hot topic of discussion among several places worldwide, most particularly in Australia. It affects property investors in more ways than one. As we would like to guide people in building a solid foundation of creating wealth for themselves, we would like to present these slides that talk about negative outcomes that will be brought about once negative gearing has been abolished.
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Negative Gearing: Why It Should NOT Be Scrapped
- 1. Negative Gearing Why it Should NOT Be Scrapped
- 2. Brought to you by:
- 4. What is Negative Gearing? What would happen if Negative Gearing is abolished?
- 5. What is Negative Gearing?
- 7. Illuminati Wikipedia is TL;DR
- 8. What Does it Mean??
- 9. “Obviously very few people buy investment properties with their own money and gearing, or borrowing money to purchase an asset, allows you to purchase investments that you otherwise couldn’t. Negative gearing is when the cost of owning a property exceeds the income it produces. Australia is one of only a few developed nations that allows negative gearing.” An article about Negative Gearing By JDL Strategies (http://www.jdlstrategies.com.au/spotlight-on- negative-gearing/)
- 10. Negative Gearing • It allows you to offset costs associated with your rental property(s) against your taxable income, as long as the property is producing income and your intention is to achieve a positive net cash flow. • Offset through common deductions: interest costs, repairs and maintenance, and property agent fees and commission.
- 11. BEYOND THE TAX REFUND… Note that the purpose of negatively gearing an investment property is not the tax refund you receive.
- 12. BEYOND THE TAX REFUND… Note that the purpose of negatively gearing an investment property is not the tax refund you receive. The purpose of negative gearing is to help you build your assets – and your wealth – as quickly as possible.
- 13. Simply put… “Negative gearing helps investors recoup possible losses from maintenance costs and rental income by claiming those losses against their other income.” An article about Negative Gearing By JDL Strategies (check it here!)
- 14. It’s a type of financial leverage.
- 15. It’s not a bad thing. It’s a type of financial leverage.
- 16. What would happen if Negative Gearing is abolished?
- 17. Rents would skyrocket Negative gearing = # of rentable houses = demand for available ones
- 18. Rents would skyrocket “Landlords may increase their rent to compensate for the lack of negative gearing and because of the supply and demand argument, rents could skyrocket. ”
- 19. Increased demand for public housing “If tenants can’t find a home that will not leave a hole in their pockets, their only option may be to apply for public housing. But with the waiting list as long as it is, increased demand for a suitable social dwelling might only make the system more inefficient and usher in a public housing crisis.”
- 20. Properties for sale would oversaturate the market “Properties with negative cash flow would hurt many investors. Landlords might sell them off if negative gearing was abolished. When properties for sale oversaturate the market, prices may plummet and bring an unprecedented property market bust.”
- 21. Inflation would increase. “Without negative gearing in place, inflation could be expected to increase along with the higher cost of holding properties. This is because housing costs are a component of the inflation figures.”
- 22. Derailed Retirement Planning Trying to save money for your retirement through property investment?
- 23. Derailed Retirement Planning Trying to save money for your retirement through property investment? Much harder without Negative Gearing.
- 24. “According to the Australian Taxation Office statistics, those who made a loss on rental properties had a taxable income of $80,000 or less — about 66.5 per cent of investors. It would be harder for them to secure their financial future and could derail their retirement planning.”
- 25. Negative gearing is important for the market to be balanced. Removing it might send the property market in a tailspin.
- 26. We at JDL Strategies can help you get up to speed with government policies like negative gearing and grow a smart property portfolio.
- 27. Presented by JDL Strategies Suite 11, Glenham Plaza, 4217 17 Karp Court, Bundall, QLD http://www.jdlstrategies.com.au/contact/