Originally Posted by
minimoke
So whats going to happen with Labours "Negative Gearing" policy. Seems to me there are quite a few Mom and Pop investors who are negatively geared (expenses exceed income) today so as to provide a income for the future. And you also have people with larger portfolios who are likely to be positively geared over their entire property portfolio.
Sp the mom and pops, loosing the tax calculation will have to cover the difference themselves. Or they will put rents up. Or they will have to sell up. In which case there will be a minor surge on the property supply side which may see property values decrease. Given the houses are likely not "affordable" the positively geared owners will buy up these properties, reducing competitions and driving up rents. Thats short term.
Medium term rents will go up faster than wages so govt will need to increase Working For Family, Accommodation Supplement or Minimum wage.
As government payments increase at a faster rate than the negative gearing offset taxes will have to rise or government services will need to increase. Increase in minimum wage will see employers mover more to automation which will see les employment amongst renteers.
Long term current negatively geared property owners wont have the retirement income they planned, leaving a shortfall which will see them voting for a Government that increase the pension.
But on the bright side. Proper investment wont be such an attractive option. So those with cash will look for alternative investments. The Share Market being an obvious choice. Increased demand will see an increase in share prices. Given I am out of rentals and more into stocks I think I will have to support this policy. My shares will increase in value and by the time I retire I'll get a bigger penison. Win / Win as far as I can see.