Director of Tesoro Financial, Jack Punch, held a similar sentiment to Nicol, saying that first home buyers may have an easier chance of getting in the door; however, both investors and renters will lose out.
“Negative gearing was proposed to incentivise people to invest in property as a tax payable offset, without [it], investors won’t be as incentivised to buy property. There is a housing shortage and without investors, the only people buying and building will be owner-occupiers – a lot of whom can’t afford to buy,” Punch said.
Punch said that this would result in no new houses, higher homeless rates, and suffering immigration.
He further told Broker Daily that investors may sell down portfolios, resulting in an increase in supply and a decrease in house prices, but it would be likely that investors would increase rental prices to cover the tax burden of not having income offset.
“By canning it altogether, someone loses. At the moment it’s the ATO losing out on people legally minimising tax payable on their income due to NG. If NG is taken away, the ATO gets a win as they’ll receive more tax on income,” Punch said.
“An effective control would be to not abolish completely but to affect the negative gearing on one/two investment properties and all investment properties held after that would have no negative gearing component to them. This way investors will still be buying but not over indulging and everyone wins.”