Negative gearing affects everyone [video]

Negative gearing policy could be one of the big deciding factors in the upcoming election.gearing negative

Labor’s proposed policy to get rid of negative gearing on existing residential property and increase capital gains tax has been all over the media.

I’ve given my thoughts on negative gearing here.

The Real Estate Institutes from around Australian and other leading Real Estate Agencies have formed a campaign to show these changes are beyond a class war and negative gearing affects everyone.

This policy – if ever adopted – directly affects the millions of Australians who own any property, whether it’s an investment or their own home.

It also affects the 18 million Australians who have a stake in property through their superannuation funds.

But there’s more…

According to the campaign, as well as falling house prices, the knock-on effects will see jobs destroyed and government revenues fall, and may even send the Australian economy into recession. 

The industry campaign admits it has a vested interest.

They explain…

Yes, this policy will affect the property industry, which is now the biggest industry in Australia. Such a policy would rip billions of dollars out of our sector at a stroke.

But it’s obvious that taking billions of dollars out of the economy all at once is a recipe for disaster for all of us.

Doesn’t It Strike You As Strange…

…that all of a sudden, everyone seems to be talking about plans to axe negative gearing and halve capital gains tax concessions for investors, and that some people think this is just a great idea to punish “the rich” who benefit from it?

Doesn’t it strike you as strange that at the heart of this policy sits a report from the ANU that effectively admits it has ignored or denied the consequences of the policy, and which appears to have deliberately understated average incomes to produce more “rich” people?

You can read more thoughts negative gearing here:

Also published on Medium.

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Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit

'Negative gearing affects everyone [video]' have 9 comments

  1. May 25, 2016 @ 6:14 am Dean

    I still can’t find anyone who can explain to me why any intelligent investor would think it would be a good idea to buy a new property for which they have to compete against investors and owner occupiers only to wake up the next day and only be able to sell it to owner occupiers? Even if you held the property for 5 – 10 years the fact that you lose half of your potential purchasers the very day after you bought the property means any gains would be minimal. It will take investors out the market and therefore result in less homes. Simple.


    • May 25, 2016 @ 10:06 pm Mr C

      That’s not entirely correct. Both investors and owner occupiers would be interested buyers but not at the premium price paid by the initial purchaser. Would take maybe 3 to 5 years before the initial purchaser might be able to recover their initial purchase price and maybe longer if not an investment grade property as Micheal has emphasized time and time again.


  2. May 25, 2016 @ 6:26 am Dean

    The great point this video makes is that if you stop the housing market dead housing will be just as unaffordable… If you cut jobs out of the economy and leave more people on welfare your taxes will rise and you won’t be able to get a loan for a house even if there is a drop in prices. Plus the bank will see housing as a less safe asset class if the prices drop and therefore will either raise their interest rates on loans or will ask for larger desposits… Which means the house will be even more unaffordable.


    • May 25, 2016 @ 9:56 pm Mr C

      Man that is a lot of ifs. Fact is Labor policy will actually encourage more property construction. So more jobs, less welfare etc. Exactly the opposite of all your IFs. You will still be able to get a loan for a house as well if and when prices drop. In fact you will need to borrow LESS money and need to save less money for a deposit and also pay LESS stamp duty. Sounds like a good outcome to me.


  3. May 25, 2016 @ 11:26 am Doug

    Don’t forget the banking and finance sectors, if the market takes a tumble because of the axing of negative gearing, negative equity could result for many meaning the banks will have to call in loans putting further downward pressure on prices as the market gets more stock.


    • May 25, 2016 @ 9:49 pm Mr C

      @Doug You don’t need to remove negative gearing for this to happen. It happens naturally after EVER property boom either from excess stock hitting the market, rising interest rates, rising unemployment or a credit squeeze.


  4. May 25, 2016 @ 9:45 pm Mr C

    Cant believe the amount of propaganda, misinformation, lies and deceit here. And this video making such enormous, unjustified claims is just more propaganda. Fact is the removal of negative gearing will make property more affordable for everyone. Yes initially property prices will (temporarily) fall by maybe 10% or even 20%. But this has happened as recently as 2009 when the RBA kept pushing interest rates up and mortgages peaked at 9.25%. None of the predicted disasters happened then. In fact home buyers came rushing in and snapped up properties at affordable prices. Smart investors like myself did the same and ended up with positively geared properties..How wonderful ! Property prices would hence re-adjust back to realistic values again. Yes, those who bought in the peak of the boom would loose money if they are forced to sell but this happens after every property boom. We need to put things into context and that is an environment of falling interest rates. So you would have properties coming on the market at lower prices with loans at lower interest rates. That makes them much more affordable. Whats wrong with that ? You wouldn’t need negative gearing to help make ends meet. The interest on investment loans still remains 100% tax deductible is the point everyone is missing here. I say again: interest on loans and all property expenses remain 100% tax deductible if negative gearing is removed. The only change is that you cant claim more than your property income in any one year and any such excess of expenses is rolled over into the next tax year and continues to do so until you can start offsetting your accumulated losses against profits made on the property. So the investor is losing nothing with the removal of negative gearing. Its really all about managing cash flow and that means running the property more like a business rather than just a way to pay less tax!


    • May 25, 2016 @ 9:47 pm Michael Yardney

      Mr C
      Thanks for taking the time to leave such a detailed message
      You’re right that one shouldn’t invest for tax purposes, they are just cream on the top, but if you can “negatively gear” other businesses – if you can cliam the loss when you start your Jim’s Dog Wash – why shouldn’t you be able to do so for property


      • May 25, 2016 @ 10:01 pm Mr C

        I understood that rollover provisions apply for losses on a business. That’s why many companies purchase companies with accumulated losses. Saves them a bundle of tax where the purchase price of the business is much less than the accumulated losses for tax purposes. Also if the business owner has no other income how can they negatively gear?
        Anyway maybe you are correct.


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