Negative Gearing Going?

Hi Scott

My question is simple, though I know your answer may not be. What do you think will happen with negative gearing? I’m worried because I own three properties (all on interest only loans, all negatively geared), and I worry what will happen if they abolish it. I am thinking about buying another property in student accommodation.

Rosemary

Hi Rosemary,

Labor’s proposal won’t come into effect until 2017, and they’ve said in their policy document that the changes won’t be retrospective. In other words, your existing tax deduction status is safe. Still, negative gearing is now officially an election issue, and the Minister for Networth will now have to have address it, one way or another.

My personal view is that negative gearing, much like superannuation concessions to higher income earners, will eventually be clipped. Not if, but when. That’s why I don’t advocate making an investment solely for the tax benefits. Right now you’re losing money. Work out how to turn that around, because any changes to the tax treatment of housing will likely hit the market hard.

Scott