Media spin or real change? How the negative gearing debate impacts your investments.

BY CHRIS GRAY, CEO, YOUR EMPIRE

Last month, the Australian media spent considerable time discussing the issue of negative gearing, igniting a debate that captured headlines across the country. The speculation was sparked by questions directed at politicians, with journalists probing whether negative gearing was being reviewed ahead of the next election. While this created significant buzz, it is crucial to recognize that much of the conversation may have been blown out of proportion.

MEDIA MANIPULATION OR GENUINE CONCERN?

A closer examination of the media's approach reveals that journalists were attempting to lead politicians into making revealing statements that could fuel a broader story. However, the responses from political leaders were largely consistent: Treasury constantly reviews a wide range of policies and models as part of its regular operations. This includes analysing negative gearing, among many other issues. But there was no explicit indication that changes to negative gearing were on the immediate agenda.

This situation exemplifies how the media can sometimes amplify an issue to generate more attention, even when there is little substantial news. Given that media outlets rely on engagement – whether through television, print, or online platforms – creating a story, even from limited information, ensures more viewers, readers, and clicks. As consumers of news, it’s essential to critically assess the sources of information and be cautious of sensationalist reporting, particularly when it comes to significant economic issues like the property market.

NEGATIVE GEARING: THE REAL STORY FOR INVESTORS

Turning to the actual implications of negative gearing, it’s vital to understand its purpose and how it fits into property investment strategies. Negative gearing allows property investors to offset losses, such as when rental income doesn’t cover the full mortgage and other property–related expenses, against their taxable income. While this tax benefit can be helpful, it should never be the primary reason to invest in realestate.

Successful property investment is fundamentally about long–term capital growth. For instance, an investor who purchases a property for $1 million aims for that property to appreciate over time, ideally doubling in value to $2 million over a span of seven to fifteen years. Whether or not they receive a tax deduction due to negative gearing should be viewed as a bonus, not a driving force behind the investment decision. The real wealth in property investment is built through capital appreciation – seeing that $2 million property one day grow to $4 million.

The media often frames negative gearing as a central factor in the property market, but experienced investors know that the key to success lies in choosing the right assets and holding them for the long term. While the loss offset provided by negative gearing can soften the blow of early cash flow shortfalls, it pales in comparison to the potential gains from capital growth over time.

THE BIGGER PICTURE FOR INVESTORS

Lookin g forward, it’s clear that the property market will always be subject to political scrutiny and potential policy shifts, including around negative gearing. However, the fundamentals of investing in real estate remain unchanged. Investors should continue focusing on long–term strategies, building wealth through capital gains, and maintaining a clear understanding of why they are investing in the first place.

Whether negative gearing stays or goes, those who invest wisely, with a view to long–term value, will likely remain ahead. The lesson here is to not be distracted by media hype or short–term tax benefits, but to remain committed to the bigger picture – building wealth through smart property investments over time.

Buyers are out of lockdown, are keen to see wh at properties are available, which could be an even higher demand than we’re seeing already.

Many agents may not have hit their target revenue for 2021 and won’t want to go on holiday if there’s deals to be done. They certainly won’t want their competition to be selling what could be theirs.