The reform of negative gearing has been debated for years as the gap between Australian’s disposable income and house prices gets bigger and bigger.
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00:00Negative gearing costs the Australian
00:02taxpayers a lot of money.
00:03Negative gearing is a term we hear
00:06bandied about often when it comes to
00:07Australia's housing crisis.
00:09It's estimated that at current interest
00:12rates, people would need at least 50
00:14percent of their income to service
00:17a new mortgage.
00:18Negative gearing occurs when the costs
00:20of owning an investment property like
00:22mortgage interest and maintenance
00:24exceeds the rental income it generates.
00:27Investors use this loss to reduce their
00:29taxable income, while many believe it
00:32pays off as property values rise over
00:35time.
00:35It's potentially taken away from home
00:38ownership, born from the fact that there
00:41are more investors who are competing
00:43for property ownership against first
00:45homebuyers say, but also because that
00:47additional demand for limited supply of
00:50property adds to the value of homes and
00:53makes them more unaffordable to buy.