I think if the company makes no profit and pays no tax that's fine. The problem people have with negative gearing is that it offsets non investment income. So Ms Jones now pays less income tax on her salary.

[–] Nath@aussie.zone 1 points 1 year ago (1 children)

It offsets personal income by the difference between what the property costs and what it brings in for rent. We need an accountant to chime in here. If Ms. Jones invests money into her business to keep it going (since costs are outweighing income), is that money still income? Or would it be deductible as well?

Either way, that amount isn't a going to be more than the rental income. And under either model the rent income isn't taxed until the property is generating more rent than its outgoings. Once that happens, it's time to buy the next property and go back into the red. It feels like s ponzi scheme, doesn't it?

I see the problems. I just don't know how to fix them.

[–] billytheid@aussie.zone 0 points 1 year ago (1 children)

You don’t seem to see the problem at all, the goal of removing negative gearing is to force people to sell, what that means to their personal finances is immaterial

[–] Nath@aussie.zone 2 points 1 year ago

I don't see how to remove negative gearing. Any political party who even mentions it is immediately unable to form government. Mr Shorten pledged to overhaul Negative gearing during the 2019 election and was quickly trounced, despite the Liberal party being in a shambles at the time.

I also don't see how it is going to make that much difference to the people we want. I don't know how many properties my own landlord owns, but I know it's more than three. Those are the people we want to urge to sell. Negative Gearing just isn't that large a factor in his finances. In his world, the rent collected is his income. Take Negative Gearing away and he just does the 'Landlord inc' company route. Rent collected is company revenue, ponzi scheme continues as his 'company' buys properties and makes no profit.