Is Negative Gearing On The Way Out?

 

Geared

There has been a great deal of recent media coverage and discussion over the Federal Government’s consideration of making changes to Negative Gearing in relation to real estate.

The debate is hotting up with speculation that Prime Minister Malcolm Turnbull may face a back bench revolt if he moves to incorporate changes in the current structure into the May budget.

There is likely to be an increasing number of stakeholders entering the discussion with increasing volume over the next few weeks.

Negative Gearing is a tax offset mechanism that is routinely used to reduce tax liability by using the costs associated with holding an income producing asset against the income the asset produces.

It is not a mechanism that is exclusive to real estate, but on the contrary, is available to borrowed funding for share portfolios and other income producing assets.

For this reason, it is seen by many that changes in negative gearing in relation to property is an unfair bias against real estate investment, and one which would have significant impact on real estate investment behaviour.

In all reality though, the topic in our current Election Year has become an extremely political issue and as such may well not see any changes until well into the future after the election and when the toxic media coverage subsides.

Below is a link to our previous E-Newsletter of July 2015 where we examined why the Reserve Bank was interested in reviewing Negative Gearing.

http://www.regionalandruralrealty.com.au/what-is-negative-gearing-why-is-it-under-review/

 

Drew Oliver

Principal & Licensee

Regional & Rural Realty