President of REIA, Peter Bushby, suggested that negative gearing has been helping the government to increase the stock of rental property within the country.He said: "Negative gearing could be the difference between investing or not in rental housing in a subdued market, as is the case at present. Any tweaking to the current taxation arrangements could tip the balance against property investment."
Properties are negatively geared if they are bought using a loan and the income from rent, following other deductions, is lower than the interest on the money borrowed.
To help with this, the government currently has a tax system in place that offers property investors to claim for a deduction worth the total amount of rental expenses versus other income and rent.
Posted by Ravin Chatlani