A quick background on where the $3.1 billion figure comes from.... it's based on speculation with figures an economist has used in their "modelling". The assumptions they have used is that every private landlord has a mortgage of $300,000 per rental property they own. Since there is no official data on how many rental properties have mortgages and for what amount, the figures put into the model is guess work.Hmmmmm is the substance of his argument less relevant?
Re-introducing tax deductibility is unaffordable. It may be inflationary, which doesn't help the cost of living.
There should be a disincentive to purchasing existing homes for investment/speculation in the current housing climate.
The $3.1 billion figure is worked on that there are just over 440,000 rental properties owned by private landlords in the country. The assumption is that each of those landlords owes $300,000 each per property they own. At an interest rate of 7%, that means they are paying (based on that assumed amount) approximately $21,000 PA in interest. At a tax rate of 33%, that's an average of $7,000 per dwelling landlords will have their tax bills reduced by. $7,000 times 440,000 properties and that gives the assumed amount of $3.08 billion per year going back to landlords.
Except, it doesn't take into account the fact that interest rates are dropping. Dropping down to 6%, and the amount of mortgage deductibility ("tax cut" to landlords) reduces by $436 mil. To 5%, and the "tax cut" goes down by $871 mil. To 4%, and that $3.1 billion figure drops down to $1.307 bill.
