The latest figures* released by the Australian Bureau of Statistics (ABS) shows property investment is still in many people’s reach and many are using negative gearing to help them reach their financial goals; figures show 62 per cent of people who negatively gear one property have taxable incomes under $80,000.
Breaking the figures down by professions, these include over 396,000 school teachers and over 266,000 office and practice managers. Looking further down the list, nearly 322,000 midwifery and nursing professionals, over 233,000 personal carers and assistants, and over 155,000 truck drivers are choosing to negatively gear their investment property.
Although you may think you haven’t enough equity in your own home, or you may think your deposit is too small, or you’re not earning enough, talk to a financial specialist who can do some number crunching for you – you’ll be surprised with what they come up with. Just ask the 200,000 plus personal carers and assistants, 100,000 plus electricians and nearly 55,000 car, bus and rail drivers!
While the issue of negative gearing as a tax deduction is once again on the political table with Labor recently announcing it plans to scrap negative gearing on new purchases of existing properties if elected, research over the years shows this will be a bad move for the housing market.
Labor argues negative gearing is making property ownership unaffordable for many people, however the latest independent research undertaken for the Housing Industry Association (HIA)** by the Centre for International Economics (CIE) suggests otherwise; rental prices would rise and housing affordability would worsen by increasing the tax on investing in residential homes.
HIA’s principal economist Tim Reardon, recently told a property news outlet*** changes to negative gearing would adversely impact the housing market, exacerbating the current undersupply of housing, and further reduce the efficiency of the housing market.
Mr Reardon says if the government made changes, investors would leave the market and this would drive the price of rentals up. He believes increasing taxes and restrictions was not the way to solve the affordability challenge; instead, less government involvement and less taxes would solve the issue.
We unfortunately haven’t got the crystal ball to see what decisions will be made in Canberra, but whatever the politicians decide, people still need somewhere to live.
As we have been in business for over 40 years helping people realise their financial dreams, we strongly believe investing in property is a relatively low risk investment with good rewards provided you speak to the professionals, get good financial advice and look at it as a long term strategy.
We do more than simply manage and sell property; we’re keen to share our knowledge and experience to help you make informed decisions. Get in touch if you want to know more!
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