Under-35s in the UK face becoming permanent renters, warns thinktank
Same problem in Australia. Just to define some terms for non-Australian folk:<p>- Negative gearing: A deduction received on net rental income losses (e.g. I&#x27;m a landlord who pays $100 in loan interest, receives $60 in rent, so I claim a tax deduction of $40)<p>- Capital gains: I buy a house worth $100,000. A few years later I sell it for $260,000. I&#x27;ve made a capital gain of $160,000.<p>The under 30s age group receive:<p>- 1% of total negative gearing tax benefits, whereas the 50+ age group receive 55% (<a href="http:&#x2F;&#x2F;www.macrobusiness.com.au&#x2F;wp-content&#x2F;uploads&#x2F;2016&#x2F;02&#x2F;ScreenHunter_11535-Feb.-16-08.09.jpg" rel="nofollow">http:&#x2F;&#x2F;www.macrobusiness.com.au&#x2F;wp-content&#x2F;uploads&#x2F;2016&#x2F;02&#x2F;S...</a>)<p>- 2% of capital gains tax benefits, whereas the 50+ age group receives 76% (<a href="http:&#x2F;&#x2F;www.macrobusiness.com.au&#x2F;wp-content&#x2F;uploads&#x2F;2016&#x2F;02&#x2F;ScreenHunter_11536-Feb.-16-08.10.jpg" rel="nofollow">http:&#x2F;&#x2F;www.macrobusiness.com.au&#x2F;wp-content&#x2F;uploads&#x2F;2016&#x2F;02&#x2F;S...</a>)<p>It&#x27;s inter-generational theft perpetrated by the baby-boomers, aided and abetted by tax policy. These tax breaks also cause of financial system instability and capital mis-allocation. The tax breaks are regressive: the top 30% highest income households receive 62.2% of total negative gearing tax breaks (<a href="http:&#x2F;&#x2F;www.macrobusiness.com.au&#x2F;wp-content&#x2F;uploads&#x2F;2015&#x2F;04&#x2F;ScreenHunter_7244-Apr.-28-13.45.jpg" rel="nofollow">http:&#x2F;&#x2F;www.macrobusiness.com.au&#x2F;wp-content&#x2F;uploads&#x2F;2015&#x2F;04&#x2F;S...</a>).<p>Personally, I think the main issue is that the distortionary effect of untaxed land rents are greatly amplified by capital gains tax exemptions. That, and housing market supply inelasticities due to restrictive zoning laws, property transaction taxes (i.e. stamp duty), drip fed land releases by local governments etc.<p>Eat the young!