I bought a house with my partner in May and we received the FHOG along with the First Home Bonus (VIC gov't) for a total of $17k in grant money.

Read this article in The Age today at lunch: http://business.theage.com.au/business/grants-create-a-false-promise-of-home-being-built-in-a-day-20090622-ctwr.html

I know a lot of people in here are roughly my age and in a similar situation, so I'm wondering now that you're done and dusted with buying your first homes too - do you think the grants are fundamentally good or bad?

I tend to think that we won't know for at least 8 to 12 months.

For us, we took three years to purchase a house that we actually thought was good value - in a market that has drastically changed in those three years. We kept a scrap book of all open homes that we went to. We begun in 2005 looking at 3-beds for around 280k, now those same 3-beds are 380k.

I think the grant scheme is fundamentally flawed. I do believe it has pushed prices up in the lower-end of the market. And I hope that predictions of bursting bubbles are all wrong.

Ultimately we will be in our home for a long time now anyway, but it would be painful to see better houses selling in your street for 50-80k less than what you paid for yours! I hope that doesn't happen to us!

Artificial inflation in price for houses under the 500k mark.
It did seem to boost the failing construction industry so overall I dont think it was too bad. However, it's not going to last.

I still think prices are going to fall, quickly. At least in SEQueensland.

i will vote good, because i like free money from my government:

we didnt need the grant, but it was useful to have a bit of extra coin available that we could spend on fixing things up

possibly it has inflated house prices a little

Ultimately we will be in our home for a long time now anyway, but it would be painful to see better houses selling in your street for 50-80k less than what you paid for yours! I hope that doesn't happen to us!

If you're in your home for a long time then the price of near-future sales in your street is largely irrelevant. It's only relevant if you're looking to sell, which you're not. If you paid a price that you were happy with to have your home then be happy with it and forget about the market until you're looking to sell otherwise you'll just give yourself the s***s.

It helped out the building industry a bit but the agents are the people who ended up winning out. They should've had some body watch over the prices etc to stop the money thieving agents and vendors.

bad imo, gives an excuse for sellers to bump up there prices, and probably more than say $17k.. Buyers will probably gain more than 17K in savings when the grant is over (end of this month) as it should force prices down further.

is my logic sound?

Fundamentally it is bad, but because it's initial design was to compensate first home buyers for the increased cost of housing from the introduction of the GST, it would seem silly to can it now.

If it was canned then real estate prices would surely fall as a result. It has been extended till end of December so it will be interesting to see what the government does then.

Home owners grant needs to go. Its been artificially pricing cheaper houses and appartments up for the last few years.

I do believe it has pushed prices up in the lower-end of the market. And I hope that predictions of bursting bubbles are all wrong.

you complain about prices before you by, then don't want it to drop after you buy...

Its aim was to help first home buyers which never is bad. Stopping investors owning multiple properties would have been a bit more helpful in not creating a bubble.

It's good. I love it.
Doesn't matter if it drives house prices up - everyone is in the same boat with that - except newbies get a $7000 leg up. So you could look at it as making things a little unfairer for experienced property owners, but that balances the game.

Fundamentally it is bad, but because it's initial design was to compensate first home buyers for the increased cost of housing from the introduction of the GST, it would seem silly to can it now

My parents got one in the late 60s/early 70s. And interestingly we worked out it was about 8-10% of the purchase price!!! Proportionally much larger then the 14grand they hand out now. So They have been used in the past for long before GST existed.

And what you said while may have been the initial intention, both Howard and now Rudd have used to prop up the housing market in times of doubt. Australia has huge amounts of capital "stored" in property. If housing prices drop alot of people "lose" money.

If we are getting rid of things that artificially sustain or prop up the housing market you have to get rid of CGT exemptions and negative gearing.

Residential property is so closely interwoven into the finances of individuals it would be a game person who starts to tinker too much with it.

There are plenty of mums and dads who own 2 or 3 renters which they plan to sell off once they retire and while a correction in the property market is inevitable, people enter into these markets on the basis of the government policies that applies to the investment.

Certainty assists investors moreso than anything else.

yeah its inflated house prices a bit, watch them drop when the grant is removed

FHOG will be around forever (or for a while yet) won't it? Just that they are going to end the double / tripling of it soon?

I thought when Rudd said it definitely had an end he just meant it'd be returning to normal some time soon?

it was supposed to be over this month
I was fairly certain it was completely going but you might be right

i think it should go for existing buildings, it was a good idea and worked for the first 12months, after that the greed of people realising they could price the house just that little bit more got the better, and housing prices got over inflated and have stayed that way since, it was even more apparent when the doubled the FHOG.

I am however very much for the FHOG for new buildings, i think value has still remained in the new house market and the FHOG certainly helps and the building industry kept running means jobs. and more new houses means relief to extensive rental demands.

do you think the grants are fundamentally good or bad?

Bad. If $14K/$21k is the difference between you being able to afford a house or not... you have no place in the market. I've read a lot though that since the $14K/$21K grant came into affect, first home buyers are paying something like $50K more than they used to. All it has done IMO is inflate prices artificially because there are so many dead beats out there.

Just settled today so good. I get to own a property for $100 more a week than renting.

FHOG is retarded and completely unjustifiable on any kind of economic basis, imo.

having said that, it has been in place for too long now to just stright up remove it. tyranny of the status quo and all that. infi is right, stability is cruicial to the functioning of a market like the property market where decisions made today will have repercussions for consumers decades away.

imo they should lower the grant by a set amount, say $500 or something, each year until it is phased out. this will lower/remove the future liability of the scheme to the government while providing stability in that homeowners/investors know what is going to happen over the coming years. the worst part for investors is the uncertainty of what will happen when the extension of the scheme expires.

The first home owner grant has been set up to get people into houses that couldn't afford otherwise. In other words, loaning to people who shouldn't have home loans .

$14K off the price of a house means barely anything in terms of final price. The benefit the government intended it to have was to give ANYONE their 5% deposit required to take out a loan with any bank with mortgage insurance.

I seriously think it was unethical giving out 100% loans where the only money kicked in by first home owners was First home owner grant. If you can't save a deposit, how the hell will you pay off your homeloan?

The bank's have smartened up to this and pretty much every decent bank now requires at least 5% genuine savings to be provided along with the FHOG or gift from parents.

I personally hope they abolish the scheme altogether because it is creating a bubble for properties less than $500K. The difference between a $490K house and a $550K is lightyears apart.

I seriously think it was unethical giving out 100% loans where the only money kicked in by first home owners was First home owner grant. If you can't save a deposit, how the hell will you pay off your homeloan?

a lot of loan repayments arent much more than renting

see 2 posts above for example

when i bought it was about the same, repayments were bugger all more than rent

The benefit the government intended it to have was to give ANYONE their 5% deposit required to take out a loan with any bank with mortgage insurance

Don't you need 20% upfront nowadays anyway?

I bought a unit (with dad as guarantor) and the 14k lets me add a third bedroom and do some minor renovations which in a couple of years will allow the rent to completely pay off the interest.

Good for investment properties like that, I just have to live there for 12 months to get stamp duty concession/exemption as well.

taggs and infi ... what's your stance on negative gearing and capital gains tax then ? since you are so anti government freebees on property

Don't you need 20% upfront nowadays anyway?

When I was getting my loan approved to buy my place you needed 10% from CBA. I had pre-approval so only needed 5% still.

IMO a home load should be loaned on a single income. I don't believe in this dual income s***. It should be mandatory to front a 20% or 25% deposit. I think it verges on unethical practice for lenders to give hope to people who can't afford loans in the form of these 100%+ loans. These f***ers can't even afford to cover the goddamn fees and the fees get incorporate into the bloody loan!

FHOG...needs to go.
100% home loans...need to go.

If the market drops and prices normalize, well s*** happens. We're all going to get stung if the market keeps insanely inflating anyway.

25% deposit ?
You seriously are suggesting people should have a minimum $100,000 ? (A cheap house inside Brisbane is going to be around 400,000)
I mean I did, but seriously you think people should have that ?

And all this talk of 100% loans ? .. they are gone. The brokers are now owned by the CBA and Westpac, and they use their lending rules.

If you are lucky and have a great credit record and long term history with the CBA you might get a 97% ... might, they would much rather a 95% loan as a minimum.
At 80% they no longer want mortgage insurance. And you want 75% ...

If the market drops and prices normalize, well s*** happens

For an example of the s*** that happens, check out the various property bubbles that have burst. The key in whatever happens is confidence in the market, a slow deflate is fine, a burst is bad.

BTW it would be political suicide to do anything that would be seen to cause property prices to crash.

yeah i'm generally against any kind of intervention in a market unless it can be shown to be in the public interest. and negative gearing to me is justifiable on those grounds. it encourages investment in residential property helping to create a healthy rental market which is seen as a desirable social policy objective. some people argue that it makes it harder for first home buyers cause the greedy baby boomers are snatching up all the houses. but that ignores all the new construction/investment that wouldn't have taken place without the incentives negative gearing provides. i think keating removed negative gearing some time in the mid-eighties and then had to bring it back a few years later because it sparked a massive fall in residential investment which caused quite a few problems. however it can be argued that negative gearing increases the cost of finance to first home buyers because there are more people chasing dollars, simple supply and demand. so maybe that is a reason the FHOG could be justified to offset that cost? would need to not just be an arbitrary number though to be justifiable on those grounds.

my opinion on capital gains tax? you mean specifically in the property market or in general? i've never really though about it before too much to be honest. it is a tax which by definition distorts the market acting as a disincentive to investing activities. but it is one of the few taxes that can't (easily) be boiled down to a tax on labour, which is what most taxes can be seen in terms of as labour is the main source of income for 99% of peeps. so i guess it's fair that all forms of income be taxed, capital being one of them.

edit: when i say 'some people argue that it makes it harder for first home buyers cause the greedy baby boomers are snatching up all the houses.' i mean significantly harder, i'm not suggesting that negative gearing has no effect at all on the first home buyer's market.

last edited by taggs at 19:54:56 23/Jun/09

We got a 100% home loan, which is to say that we moved into the property owing the purchase price. Our small savings at the time (5k I think?) got eaten up by various fees, charges and stuff like building inspections etc.

The 7k FHOG was annihilated by the 9k lender's insurance.

We probably couldn't have gotten the deal we did today, at least not with a major bank like St George. Anyway, in under two years according to the bank we have brought the term of the loan down an extra 3 years by maintaining a large offset and working our arses off. During this time rates spiked like a motherf***er too.

The 100% loan enabled us to get in when we did, and despite the rates yo-yo and the property market wobbling since then we are ahead of the game IMO. If we'd waited 6 months more we would have missed our shot and would probably still be f***ing renting and saving chasing a 20% deposit.

Not everyone who takes out a 100 percenter is 'unable to save a deposit'. For us it was just a shortcut, we hope to have to mortgage done with inside 10 years.

last edited by Hogfather at 19:46:26 23/Jun/09

Low interest rates were a greater incentive to buy a house than the FHOG. If the government and banks could get together and work out a first home owners interest discount over the first 3-5 years of the loan then that would be awesome.

Few provisions.

- Calculations on how much you can borrow is based off the normal interest rate, not the discounted to ensure people aren't over committing.
- Maintain current requires for FHOG
- 10% deposit requirement.

Benefits.

- No up front money hopefully means the property market isn't artificially inflated
- You can sell your house as soon as you want, you just don't get the full benefit.
- Keeps people out of the market who shouldn't be in it.

a lot of loan repayments arent much more than renting

until interest rates go up.

re CGT and negative gearing (ie. deductions for loss making investments) both are acceptable in their current forms. the key to CGT is to not act as a disincntive to investment. if you punish corporations for investing in capital and then making a profit too much then they just relocate to the Carribean or Cayman Island and transfer all their profits offshore. don't be greedy.

re negative gearing this is an essential feature of a properly functioning economy. if it is a valid investment i.e. not intended for tax minimisation then losses should be offsetable against other assessable income.


last edited by infi at 20:51:31 23/Jun/09

re negative gearing this is an essential feature of a properly functioning economy. if it is a valid investment i.e. not intended for tax minimisation then losses should be offsetable against other assessable income.

Isn't Australia the only (or one of a few) country left with the form of negative gearing we have now?

25% deposit ?
You seriously are suggesting people should have a minimum $100,000 ? (A cheap house inside Brisbane is going to be around 400,000)

I'm seriously suggesting it should have been like that. Maybe property prices wouldn't have gone up and your average person could maybe spend some time affording a home deposit. Too late now obviously...unless the market were to drop substantially.

Isn't Australia the only (or one of a few) country left with the form of negative gearing we have now?

Well in the US your home mortgage is tax deductible. There's gotta be some incentive to invest in real estate somewhere.

a lot of loan repayments arent much more than renting
see 2 posts above for example
when i bought it was about the same, repayments were bugger all more than rent

We got a surprise when doing the sums a few months back. At current rates our mortgage repayments are exactly $1 less than what we used to pay in rent each week.
Granted, we've had to sacrifice a lvl 36 apartment view for a lvl 3 view, but sacrifice is what it's all about. I'm glad we didn't buy around 12 months ago where we may have been tempted to lock in a 9.5% rate right before rates fell off the cliff.

Because FHOG is piss easy to qualify for most buyers in our price range would also get it so over the years prices would have become distorted. The way I see it keeping the FHOG and bonus is better for my current situation because the value of our place dropping after immediate after purchase isn't great, but better for taxpayers in the long term to bugger it off.

Granted, we've had to sacrifice a lvl 36 apartment view for a lvl 3 view, but sacrifice is what it's all about. I'm glad we didn't buy around 12 months ago where we may have been tempted to lock in a 9.5% rate right before rates fell off the cliff.

yeh my brother in law did this about 12 months ago when everyone was talking About crazy inflation. Poor bastards are feeling it now.

If negative gearing is fine and given it artificially distorts the price of housing due to the effect on investors, first home owners grants are equally as fine because they offer a "tax break" (ie. handout) for people investing in their own housing.

Either the government gets the fork out of housing all together. No CGT breaks, no negative gearing and no home owner grants. Or it has to pretty much stay in them all to ensure "normal" people can actually buy houses.

Bad.

It is one of the factors that has caused the property 'apartheid' that is causing Economic and Social problems.

Where I work there is one bloke who has 4 rental properties(bought back when house prices were normal) and a another bloke whom with his well paid wife can't afford a turd. Our tax dollars through the Negative Gearing Scam are helping create the property divide and the futher exacerbation of the current problems.

But the politcians will do nothing so better suck it up and get used to it. Just don't complain about all the homeless people.

We had around 2.5% saved up, while I was still studying so no full time work. As soon as I graduated I could borrow, I simply changed positions at work and didn't have to suffer probationary period.
So with the FHOG and bonus it boosted it to 15%, we had a small guarantor backed loan to make up requirement to not have to get mortgage insurance.

Without the FHOG I would have had to wait ~1-2 years of saving to comfortably make up the difference.
The FHOG allowed me to enter the housing market sooner. So for me, it was a good thing.

FHOG doesn't, or shouldn't, allow people who normally couldn't get a house to get one. It does, or should, allow people to accelerate the time that they can buy.

Well in the US your home mortgage is tax deductible. There's gotta be some incentive to invest in real estate somewhere.

Other than appreciation?

If negative gearing is fine and given it artificially distorts the price of housing due to the effect on investors, first home owners grants are equally as fine because they offer a "tax break" (ie. handout) for people investing in their own housing.

Either the government gets the fork out of housing all together. No CGT breaks, no negative gearing and no home owner grants. Or it has to pretty much stay in them all to ensure "normal" people can actually buy houses.

yeah, but how much does it distort the market? how large should the FHOG grant be to offset this effect?

the numbers are just too arbitrary. if the justification for the FHOG is to counterbalance the increased cost of finance then the taxpayers should get some research showing why and how much of their tax dollars are needed. if the argument is to say that negative gear is pushing up the cost of housing (as distinct from the cost of finance) then i'd be sceptical about that argument and would also like to see research/numbers showing the effect.

if there is a demonstrated increase in the cost of finance or housing then i agree that arguments could be made to have this offset by some kind of government assistance. is a cash handout the best way to offset this? debatable. has the FHOG ever been justified in these terms? maybe superficially, i don't think i've ever read anything regarding it (though it could be out there).

so essentially what i'm saying is that when it comes to handouts, the cash should come after there has been a proven cause/effect and a need for them and not the other way round. FHOG smacks of middle class welfare which has been justified on the fly by various governments over the years to suit their own political purposes. if there is a structural need for them, then the tax payers deserve justification for this.


edit: i haven't actually looked but i'll check tonight whether there's anything on the FHOG in the Austrlian literature, surely there must be i'd imagine.

last edited by taggs at 07:06:04 24/Jun/09

negative gearing applies to the housing market at large. the FHOG applies to a small segment of the market.

I would argue the FHOG is far more detrimental to distorting prices at the lower end of the market where affordability is the very issue.

Negative gearing permits taxpayers to invest in loss-making assets and to claim deductions for those losses. therefore it provides an incentive to invest in an asset that would otherwise not be viable (such as rental housing). Without a range of investors to support this market of development there would be no rental housing for people who either do not want to or cannot afford to buy a house.

Negative gearing permits taxpayers to invest in loss-making assets and to claim deductions for those losses. therefore it provides an incentive to invest in an asset that would otherwise not be viable (such as rental housing).

My understanding is that because of negative gearing can offset your taxable income by such a degree that it's not worth putting renters into those houses.

When I first moved to Sydney, I lived in a moderately nice part of an Inner West Suburb. The average price of houses in this street was about $680k-$800k. Only 1 house was a rental (the one we lived in), about 3/4s of the rest were owner occupied and the rest were dark.

Here's how I would have thought it should have worked:

A person buys a house (house A) lives in it for a few years and saves up enough money to buy a second, better house (house b). They move into house B and put A up for rent. House B either pays of the mortgage of A, or B. The owner now has two assets worth hundreds of thousands of dollars. This continues until the owner has a string of paid for houses all up for rent. Not only does the owner have the rental income from N houses, but he also has the physical assets of the houses.

Now, I think it's more than fair for someone to offset their taxable income with costs generated from doing business, like claiming back costs on maintenance or upgrades for a property that someone is actually renting. I'm just not sold that giving people tax credits for buying a house and just leaving it empty for 5 years should count.

I would argue the FHOG is far more detrimental to distorting prices at the lower end of the market where affordability is the very issue.

I agree that the FHOG is inherently inflationary, but so are lower interest rates and stupid loan conditions.

It's been a while since I've done tax but I'm pretty sure there are no tax breaks if the house is not being rented.

Broadly speaking, you can deduct expenses incurred in earning the income you are paying tax on. Whether that be business, personal or investment.

So if there is no income that the ATO are collecting tax on (ie: rent), then there are no deductions allowed.

FHOG smacks of middle class welfare which has been justified on the fly by various governments over the years to suit their own political purposes.

And a tax break for upper middle property investors isn't middle class welfare ?


I am not anti negative gearing, but I am also not anti home owner grants. Infact I think the 2 are complimentary.

the numbers are just too arbitrary. if the justification for the FHOG is to counterbalance the increased cost of finance then the taxpayers should get some research showing why and how much of their tax dollars are needed.

Why as a tax payer am I subsidising the tax bill of some wealthy people who own 10/15/20 investment properties ? Why am I making it cheaper for Joe Bloggs to rent cheaper ? that is just as arbitrary.

Why as a tax payer am I subsidising the tax bill of some wealthy people who own 10/15/20 investment properties ?

Thanks to your subsidy I can buy a new TV when I get my tax return from all my evil negative gearing shenanigans!

I'm just not sold that giving people tax credits for buying a house and just leaving it empty for 5 years should count.

If the taxpayer left the investment property empty then deductions would not be allowable in relation to the property. Tax law has a principle called the "matching rule" which requires the taxpayer to be able to match a deduction to taxable income.

Negative gearing is where allowable deductions (interest, repairs, depreciation) exceed taxable income while the property hypothetically increase in prices. However if you have no rental income, it cannot really be an investment.

Negative gearing is where allowable deductions (interest, repairs, depreciation) exceed taxable income while the property hypothetically increase in prices. However if you have no rental income, it cannot really be an investment.

Thanks infi and mission. I haven't investigated much, if anything on negative gearing. So most of my opinions on the matter were ill-informed.

Negative gearing is where allowable deductions (interest, repairs, depreciation) exceed taxable income while the property hypothetically increase in prices. However if you have no rental income, it cannot really be an investment.

Should clarify that the taxable income should be gross income (as taxable income is after allowable deductions) that is being exceeded. ie: the rental income from the investment.

If you think of the rental property as a seperate business where the expenses are greater than the income, then a loss is created. This loss can then be used to reduce your other taxable income (ie: wages) before the tax is calculated.

This is the negative gearing part as the loss is allowed to reduce other income before tax is calculated. There are many cases where losses are not permitted to be used to reduce your other income (ie: capital losses can't reduce gross wages income). Here the loss is crystallised and carried forward and can only offset future capital gains.


last edited by mission at 14:22:17 24/Jun/09

And a tax break for upper middle property investors isn't middle class welfare ?

it definately could be argued that negative gearing is a form of middle class welfare. the only difference i'd suggest is that negative gearing is in place predominantly to promote a healthy rental market which is seen as a desirable social policy objective. i mentioned earlier that keating removed negative gearing sometime in the mid 80s (i think around 85) and had to bring it back a few years later due to a massive drop in residential investments which had significant consequences for the wider economy. i'm not saying i'm 100% in favour of negative gearing, but i think in the Australian context it makes sense, for the moment anyway.

now i know what you're going to say next: the FHOG can be justified on the exact same grounds, that it is seen as a desirable social policy objective to help first home buyers enter the market. and if that is the justification, that it is purely an altruistic policy to help first home buyers get into the market and this is supported by the majority of the austrlian public then despite my personal opinions on the policy i'd be happy to see it kept. not all policies need to be justifiable on economic grounds, a large amount of government policy is designed with social objectives in mind to the detriment of economic objectives. policies like industry assistance, the restrictions placed on employers in the labour market, our progressive tax system, etc are all designed with social policy objectives in mind, to the detriment of purely economic considerations like efficiency. not everything has to be justified to be better for us in terms of the economic fundamentals. but it does have to be justified to be worth the cost, or at least it should have to be.

i suppose what i'd like more than anything is for the FHOG to be justified in some way. i'd like some solid reasoning as to the motives behind the payment. and if that justification isn't there, then maybe it should go.

Why as a tax payer am I subsidising the tax bill of some wealthy people who own 10/15/20 investment properties ? Why am I making it cheaper for Joe Bloggs to rent cheaper ? that is just as arbitrary.

because the australian government on behalf of the australian people decided that government assistance to the rental market (via negative gearing) is a desirable social policy objective.

why do we have an aged pension, pharmaceutical benefits scheme or a (potential) carbon pollution reduction scheme? like i said, not everything has to be justified in terms of improving economic variables, but it should ALWAYS be justified as being worth the cost imposed on the taxpayer - however that cost may be defined.

at least in my opinion anyway.

edit: argh, fail quote tags :(

last edited by taggs at 17:41:05 24/Jun/09

i mentioned earlier that keating removed negative gearing sometime in the mid 80s (i think around 85) and had to bring it back a few years later due to a massive drop in residential investments which had significant consequences for the wider economy

In otherwords, negative gearing pushes up prices.

Either you remove negative gearing and FHGs and let housing settle to its natural price (painful/political suicide). Or you provide assistance to people getting into property ownership.

Because if you don't you run the risk of creating a subclass of people who currently don't own property and never will because the rent they pay helps to create a false economy in property propped up by the rent payers tax!

And long term you need people owning houses or they become dependant on government housing...

aged pension

Because the Australian government proposed that in return a cut of individuals income the government would build a s*** load of revenue generating infrastructure. They promised that the revenue generated would be high enough to to pay for them in retirement. That is, instead of investing that money in banks and hope that you'll be okay, invest in Australia and we'll make sure that you'll live okay.

We did build a s*** load of infrastructure, but when when things got to tough, or when things were going to well, we sold them all and spent that money. Now we have to pay for the cost of the retiring baby boomers and we're all like "why didn't you save money you scum f***s?"

Why as a tax payer am I subsidising the tax bill of some wealthy people who own 10/15/20 investment properties ? Why am I making it cheaper for Joe Bloggs to rent cheaper ?

Because we live in a mixed economy that is heavily based in social-democracy. If you don't like it you have the democratic right to f*** off to another country that isn't. The world has already done capitalist society once and if you weren't rich (like Packer rich) then you were dirt poor.

you have the democratic right to f*** off to another country

How does this make sense at all? With the exception of the dual-citizenship brigade, nobody has the right to resettle in another country.

You can always ask, but its just nowhere near a democratic right.

If the taxpayer left the investment property empty then deductions would not be allowable in relation to the property. Tax law has a principle called the "matching rule" which requires the taxpayer to be able to match a deduction to taxable income.

Off the top of my head that is not entirely true:

(i) if the property is "available to rent" then all allowable deductions are allowed. there are rules to deductions it is not just a free for all.

(ii) this is the matching principle you mention. Effectively you silo all your various earning streams. i.e. if you have a salary, you can not deduct losses on rental properties against that salary income. However if you have multiple dwellings and some are in profit, you are able to deduct those rental losses against those other profits prior to adding on to your total taxable income. Also, losses not used up in any fin year are able to be carried forward for x number of years.


Personally, I do believe that the whole negative gearing has led to an increase in property prices. The carrot for neg gearing/ owning property etc, has always been the capital gains on property. To me, there is a supply issue (in SEQ), and people having multiple houses is one of the issues.

A "stick", maybe to make the CGT discount on capital gains for property (or certain property) on a sliding scale.

EG.
private residence - no CGT
PR + 1 - 50%
PR + 2 - 25%
PR + 3 - 0%