On Living Authentically

Negative Gearing and its Impacts…

• Negative gearing is a tax deduction for people who already own their own house and are buying another house as an investment.

• By definition it cannot be accessed by first home buyers.

• This inherently favours those who have accumulated enough wealth to both own a house and invest in a second house, i.e. it favours the the wealthy in our society and is mostly inaccessible to poor

• Many people who invest in buying or building a second property do so with the intent of renting it out so that the rental income pays off much of the mortgage for them. The ‘ideal’ situation is to have the tenant pay off your investment property for you. This is a perfect example of using money to make money… at the expense of other people.

• High house prices along with high rental costs (particularly in Australia’s cities) mean that many of the young in our society, along with those who don’t earn high professional salaries, will never be able to save enough money for a house deposit while paying rent.

• As a result many of our children and grandchildren will never be able to own their own home and will spend their lives paying off investment properties owned by people at the wealthier end of society, i.e. the rich get richer while the poor get poorer.

My conclusion:

• At a personal level, negative gearing is making it more difficult for my own children to buy their own homes.

• At a national level negative gearing contributes to the growing divide between the rich and poor in our society.

• I therefore believe negative gearing should be stopped for the purchase of both existing properties and building of new homes.

• The substantial tax revenue saved can then be diverted to implementing other policies that will benefit our children and grandchildren instead of harming them, e,g, reducing the accumulated deficit we are leaving them to pay off.

The bottom line (for me):