Mr Taxman
Change the way you feel about taxes.
Get informed and discover what the taxman doesn't want you to know.
Sharing it with Australia, Mr Taxman is a regular Woman’s Day columist and TV finance commentator
  • click to visit Mr Taxman on Twitter
  • click to visit Mr Taxman on FaceBook
  • rss

Bank investment loan rate hikes to cost federal Budget $400m-plus

Aug 09, 2015

Boom time ... investors will get a bigger tax deduction from the banks’ latest rate rise. Source: Supplied

EXCLUSIVE: Banks’ investment home loan rate hikes will deliver a $400 million-plus hit to the Federal Budget.

State governments will feel pain too, experts say.

Three of the big four lenders will lift variable rates on investment loans today by at least 0.27 percentage points.

With investors are able to claim tax deductions on interest they pay, a News Corp Australia analysis of the latest Australian Taxation Office data has found the rate increase will deliver landlords at least $1.1 billion worth of extra deductions.

That translates to about $400 million of additional tax refunds.

Tougher conditions ... experts say state revenue from stamp duty will drop. Source: Supplied

Investors are still out of pocket from the rate rise because they only get back a percentage of their losses.

Other knock-on effects are also become evident.

Experts say state revenue from stamp duty and other property taxes will drop.

Property businesses are already seeing a pullback, and even bank share prices have slumped amid tougher market conditions.

Real estate author and university lecturer Peter Koulizos said a slowdown in investment activity would hit tax receipts harder than the interest rate rise would, and he was already hearing of investors taking a wait-and-see approach.

CHECK IT OUT: Compare investment loan rates here

Cashing in ... the rate increase will deliver landlords at least $1.1 billion worth of extra deductions. Source: Supplied

“State governments are going to miss out because there won’t be as many transactions,” he said.

“We are not just talking income tax here — there’s other taxes and duties that will be impacted.”

Mortgage Choice spokeswoman Jessica Darnbrough said home loan approval data showed investor demand fell in July.

“Hearsay evidence from our mortgage brokers suggests that many investors are taking a backward step, even if they have gotten to the point of pre-approval,” she said.

ATO figures show interest on loans is the biggest single tax deduction for investors. It totalled $22.3 billion in 2012-13, the latest year of available data, and is believed to have climbed amid the property boom in recent years.

 

Not so good ... Mortgage Choice spokeswoman Jessica Darnbrough says home loan approval data shows investor demand fell in July. Source: Supplied

Deakin University tax lecturer Adrian Raftery said the ATO would lose more from investor deductions than it gained from any corresponding rise in bank profits.

“In 1990 investor loans were 2 per cent higher than owner occupier loans, and we seem to be heading towards that again,” he said.

Dr Raftery said Aussie Home Loans founder John Symond brought equality to investor and owner-occupier mortgage rates in the mid-1990s.

Mr Symond told a federal parliamentary inquiry late last week that tougher lending restrictions for Australians might make it easier for foreign investors to “come in and gobble up what they want”.

“What about the 20 per cent or 25 per cent, in some areas 30 per cent, of foreign buyers who predominantly don’t borrow here?” he said.

Original article was published in News.com.au on 9 August 2015

http://www.news.com.au/finance/money/bank-investment-loan-rate-hikes-to-cost-federal-budget-400m-plus/story-e6frfmdr-1227476546604




Comments

Post a New Comment

Media Availability

Are you interested in booking Mr Taxman for a speaking engagement or requesting his viewpoints for an article?

comments-rhsLatest Comments

  • "I have been in relationship with my boyfriend for 2 year now and we were planning to get married soon and all of a sudden he left me for another girl, i really love this guy and never can imagine my..."

    By: BOANTE at Dec 07, 2019 12:19AM

    Post: Marriage

  • "Are You Heartbroken? Don’t be upset, let Dr.Eddy help you get your Ex back” I’m so excited my boyfriend is back after he left me for another girl. My boyfriend was having an affair with a co-worker..."

    By: Pauline .S at Dec 06, 2019 2:13AM

    Post: Marriage

  • "I just want the whole world to know about this spell caster I met two weeks ago, wisdomspiritualtemple@gmail.com I cannot say everything he has done for me my wife left me 3 years ago left with my..."

    By: micheal at Dec 05, 2019 12:43PM

    Post: Marriage

  • "The simple truth about binary options which many of us do not know is the fact that it is mainly based on predictions. Without proper knowledge of what next can happen to the stock market, you are..."

    By: Richard Walters at Dec 02, 2019 3:42AM

    Post: Foreign currency trading

  • "Life has not been so easy for me, i almost gave up on getting cured of HSV2 because i have tried many treatment and still don't work for me, so i was going place to place just for me to search for..."

    By: jesse maryam at Dec 01, 2019 6:26AM

    Post: Tax is key in the new-versus-old property debate for investors