Australia housing bubble

[b0son]

Originally Posted by xax2

Capital Gains Tax came in in 1987 and was originally discounted for inflation but became difficult to calculate so they made it apply to 50% of the gain which is a much clearer formula.

https://www.theguardian.com/business...ed-the-economy

Have a look at the graph titled 'Number of taxpayers earning a rental profit or loss'. Note how the number of negatively geared investors soared after 1999, the year the CGT discount was introduced.

[xax2]

Originally Posted by b0son

https://www.theguardian.com/business...ed-the-economy

Have a look at the graph titled 'Number of taxpayers earning a rental profit or loss'. Note how the number of negatively geared investors soared after 1999, the year the CGT discount was introduced.

Investors paid no Capital Gain Tax prior to 1987...so on that logic it should have been harder for first home buyers back then than it is now! Prices should have been through the roof!
At least now, investors pay tax on 50% of the total gain in value, regardless of how long they've held it. Prior to 1999 there WAS a 'discount' on the CGT you paid, but it was linked to the inflation rate (in fact it was a sizeable discount if you'd owned the property for 10 years as total inflation over that time could be used to reduce the 'profit' they calculated the tax on). By removing the 'inflation over the total period' discount and replacing it with a 50% discount regardless of how long you owned the property, it costs investors more the longer they hold it.....and earns the Government $billions. $Billions more than when there was no Capital Gains Tax prior to 1987 (ie Zero).
Lets get it straight, property investment can be risky, but does have it's rewards for those taking the risk, but it also earns the Government plenty of money through CGT.
Personally, I'm not a big fan of negative gearing as I don't think you should be allowed to claim expenses that exceed the income on the property....that means other tax-payers are subsidising your investment. The investment should be able to stand on it's own two feet. But we need private investment, otherwise we'd have a massive shortfall in rental accommodation and society would struggle to cope with that.