Negative gearing

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ajw373
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Re: Negative gearing

Post by ajw373 »

boronia wrote:
ajw373 wrote:
Renters determine rent prices not landlords. More than likely what would happen is people would sell their rentals and housing prices would come down and more owners would enter the market.
That would depend on market conditions. When there is a shortage of rental stock, prices go up. When cost of ownership goes up (interest rates/repayments, taxes, council rates) rental goes up. Renters don't get much say in it at all.
You should have stopped first line which was market conditions dictate rent. And market conditions are driven by the renters not the landlord. As a land lord at present let me tell you I am dictated to by market conditions. I would love someone to May me $500p/w for my place but reality is if I asked for that no one would rent it. So I settle for $420p/w because that is what the market though the tenants have said it is worth.
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Re: Negative gearing

Post by V981 »

ajw373 wrote:
V981 wrote: But look at it from a longer term perspective. By allowing me to negatively gear now, which yes, does allow me to reduce my tax slightly, they are also allowing me to build my own wealth. By the time I get to retirement age, I am probably going to have a number of assets worth X million dollars, which in turn will allow me to fund my own retirement and not need to draw on the aged pension. In the longer term, all going to plan, the government and tax payers will actually save alot of money from people like me who will hopefully be in a position to be self sustainable in retirement.
All well and good for you, but what about everyone else that you are keeping out of building their own wealth through owning their own home?
Well, we all started with nothing. I had to save like buggery in my early 20's to build up a deposit and associated costs to purchase my first place.

It staggers me how many young people blow their money on "living the life of Kim Kardashian" then have the nerve to bitch about not being able to afford to buy a house. One such example is a friend of mine who currently earns around $55,000 a year, says he can't get his foot into the real estate market, but has just bought himself a brand new Audi coupe. What does that tell you?

There are also alot of younger people out there who say they can't afford to buy a home, but who also simply refuse to consider any suburb that extends beyond Brunswick. I get that its a little tougher these days, but its not yet out of reach. There are some good bargains still to be found if you look in the right areas.
The views expressed by me are mine and mine only. They do not neccesarily fall in line with the views of my friends, family, collegues or my employer.
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Re: Negative gearing

Post by ajw373 »

V981 wrote:
Well, we all started with nothing. I had to save like buggery in my early 20's to build up a deposit and associated costs to purchase my first place.

It staggers me how many young people blow their money on "living the life of Kim Kardashian" then have the nerve to bitch about not being able to afford to buy a house. One such example is a friend of mine who currently earns around $55,000 a year, says he can't get his foot into the real estate market, but has just bought himself a brand new Audi coupe. What does that tell you?

There are also alot of younger people out there who say they can't afford to buy a home, but who also simply refuse to consider any suburb that extends beyond Brunswick. I get that its a little tougher these days, but its not yet out of reach. There are some good bargains still to be found if you look in the right areas.
I am in a similar boat too. Started with a small house in the burbs and only now 15 years later getting a bigger one closer in. But that's not the point. You talk about there being bargains to be had but if you had t picked up multiple bargains then there would be even more bargains to go around and closer in too. So see you are effecting the market and being subsidised by the government to do so.

In my case I only own the one home which is being rented out so I am negative gearing and taking full advantage of the tax benefit that brings. Doesn't mean it is right but I would be mad not to use the tax law to my advantage. But I do t expect the government to subsidise an investment in additional properties that wouldn't otherwise pay for themselves without a tax benefit. For my future I invest elsewhere investing in property is a mugs game IMO and not sustainable long term.
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eddy
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Re: Negative gearing

Post by eddy »

Back to my original post Labor has got it while all the others still do not http://www.smh.com.au/federal-politics/ ... msyky.html
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Re: Negative gearing

Post by CCCC »

eddy wrote:Back to my original post Labor has got it while all the others still do not http://www.smh.com.au/federal-politics/ ... msyky.html
Majority of negative gearers only have one property , a real property investor uses positive geared structures so the rent covers all out goings,
Its the positive geared investors with multiple properties I think you have the real issue with.
These pro investors don't buy new builds because positive geared is normally established older builds.
Easy enough to reduce your land tax component by buying multiple properties in different states , but a land tax is tax deducible so no big deterrent.
Theres plenty of positive geared properties out there if you do your home work.

Labor has just lost the next election because of their stand on negative gearing because its going to effect all the Labor voters who only have one
investment property or are looking at buying one.
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Re: Negative gearing

Post by simonl »

CCCC wrote:Easy enough to reduce your land tax component by buying multiple properties in different states , but a land tax is tax deducible so no big deterrent.

Labor has just lost the next election because of their stand on negative gearing because its going to effect all the Labor voters who only have one
investment property or are looking at buying one.
That's a loophole that the commonwealth and/or states should close!

I would suggest that they have entered the next election because of it. They had to do something to be in the race.
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Re: Negative gearing

Post by CCCC »

simonl wrote:
CCCC wrote:Easy enough to reduce your land tax component by buying multiple properties in different states , but a land tax is tax deducible so no big deterrent.

Labor has just lost the next election because of their stand on negative gearing because its going to effect all the Labor voters who only have one
investment property or are looking at buying one.
That's a loophole that the commonwealth and/or states should close!

I would suggest that they have entered the next election because of it. They had to do something to be in the race.
Land Tax is a state tax and tax deduction is Federal , land tax was suppose to be abolished when GST was introduced.

Majority of negative gearers are in the $30,000 to $80,000 income range which one would think majority would most likely vote Labor
and most likely now vote Liberal at the next election , Easy win for the Liberals over this decision by Labor.
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Re: Negative gearing

Post by simonl »

CCCC wrote:land tax was suppose to be abolished when GST was introduced.
I don't recall that. Do you have a link?
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eddy
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Re: Negative gearing

Post by eddy »

Scott must think Australians are a pretty dumb lot because he was on TV saying that most people who owned a negativity geared property only had a taxable income of $80,000.

He never said what their income was before all the deductions.

What a spin he said it with so much sincerity.

The builders must have rocks in their head as it will create heaps of jobs with investors only being able to claim on new houses.

First home buyers will not have to compete with cashed up Chinese trying to get their money out their country by buying existing stock.

The old law of supply and demand must stop the price rises with more housing stock.
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Re: Negative gearing

Post by CCCC »

simonl wrote:
CCCC wrote:land tax was suppose to be abolished when GST was introduced.
I don't recall that. Do you have a link?

Just google Land tax to be abolished with the introduction of GST
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boronia
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Re: Negative gearing

Post by boronia »

CCCC wrote: land tax deduction is Federal , land tax was suppose to be abolished when GST was introduced.

Majority of negative gearers are in the $30,000 to $80,000 income range which one would think majority would most likely vote Labor
and most likely now vote Liberal at the next election , Easy win for the Liberals over this decision by Labor.
Negative gearing is more attractive to high income earners as it reduces their "high tax range" income. Lower income earners do not get the same level of benefit.

A whole lot of state taxes were supposed to be removed as a result of GST, but it never happened. I don't think this was mentioned when Baird tried to up it to 15% recently.
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Re: Negative gearing

Post by CCCC »

boronia wrote:
CCCC wrote: land tax deduction is Federal , land tax was suppose to be abolished when GST was introduced.

Majority of negative gearers are in the $30,000 to $80,000 income range which one would think majority would most likely vote Labor
and most likely now vote Liberal at the next election , Easy win for the Liberals over this decision by Labor.
Negative gearing is more attractive to high income earners as it reduces their "high tax range" income. Lower income earners do not get the same level of benefit.

A whole lot of state taxes were supposed to be removed as a result of GST, but it never happened. I don't think this was mentioned when Baird tried to up it to 15% recently.
There's no doubt about it , it favours high income earner but the lower income earners have been sold the idea of negative gearing by anyone in the housing industry.
And why wouldn't they if the end results are more sales.

Its these lower income earners with one negative geared property that are not going to favour Labor at the next election.
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Re: Negative gearing

Post by ajw373 »

Why so? These one investment house buyers will already have theirs, so no change.
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Re: Negative gearing

Post by simonl »

BTW, I'm pretty sure you're incorrect on land tax. There was a suggestion about dropping stamp duty on property transactions but this was dropped when food was taken out of the GST.
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Re: Negative gearing

Post by CCCC »

simonl wrote:BTW, I'm pretty sure you're incorrect on land tax. There was a suggestion about dropping stamp duty on property transactions but this was dropped when food was taken out of the GST.

https://en.wikipedia.org/wiki/Goods_and ... Australia)

Taken from above link:

"The federal government counteracted with its own advertising campaign which claimed that New South Wales had breached its contractual obligations under the 1999 GST Agreement by continuing to charge unfair stamp duties and land taxes, which were supposed to have been abolished. After weeks of intense media and public pressure, the New South Wales State Government announced in its budget that it would reduce stamp duty and land tax, but critics argued that the State Government did not go far enough with much broader tax reform in New South Wales required to help encourage investment and business that had been forced elsewhere due to an unfavourable New South Wales business environment. This was in response to the Commonwealth allowing another A$72 million in grants to New South Wales, in addition to existing annual increases.[12]"
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Re: Negative gearing

Post by simonl »

Look at the source: http://web.archive.org/web/200709010321 ... 99/006.asp

No mention of land tax. So it doesn't seem that wikipedia is reliable in this case. It's also not neutral - no tax economist would argue that land tax is "unfair".
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Re: Negative gearing

Post by eddy »

Malcolm Turnbull told Chris Bowen that he may lose his seat as there twice as many negatively geared investors in his area than it would take to vote him out but why would they when it has been grandfathered.

Also he said that home owners would be hit with the capital gains tax but I believe that is only for investment properties and not your home.

Yes existing house prices may stagnate but there would be heaps of jobs created building new homes and that may even increase the value of existing houses in that area.

It appears that he is getting a bit desperate and I saw him on the insiders say first you have to work out if you have a good plan and then you have have to see if it will be accepted.

That does worry me a bit because it sounds like a "free beer"party

Although after the last round of Labor in state and federal maybe all he has to do is keep breathing.
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Re: Negative gearing

Post by CCCC »

simonl wrote:Look at the source: http://web.archive.org/web/200709010321 ... 99/006.asp

No mention of land tax. So it doesn't seem that wikipedia is reliable in this case. It's also not neutral - no tax economist would argue that land tax is "unfair".
But in your link he does mention "the abolition of state taxes" Land tax in NSW is a state tax , It was widely used to the lead up of GST to do away with Land tax to get the public on side.
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Re: Negative gearing

Post by simonl »

I think that was referring to certain stamp duties - they did get rid of the stamp duty on share transactions.
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Re: Negative gearing

Post by tonyp »

An interesting piece from the API (Valuer's institute) newsletter:
We find that limiting tax deductibility of negatively geared residential investment properties would have consequences that go well beyond any tax saving to the Federal budget:
· Rents will rise by up to 10% ($2,600) per annum
· New home building will shrink by around 4% nationally, or 7,200 dwellings a year
· GDP would shrink by around $19 billion per annum on average, equating to some 1% of Australia’s $190 billion annual income
· 175,000 fewer jobs would be created over the next 10 years, resulting in the unemployment rate rising from 5.8% to 5.9%
· Government revenue across a range of taxes would shrink by $1.65 billion per annum
· 70,000 extra households would be pushed into housing rental stress
· If the government were to compensate these stressed households, it would require an additional subsidy outlay of $650 million per annum.
In other words, the impact would go well beyond any saving of the income tax concession, to a multitude of unintended consequences.
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Re: Negative gearing

Post by eddy »

Had a look at their site http://www.valuersinstitute.com.au/ and of coarse they would like to see house prices go through the roof so they would make more money.

I cannot see any reasoning for any of their thinking and it just sounds like an attack plan by the Libs as they have not got any policy of their own.

However I think Labor should drop their tax reduction as it does not matter who is running the country house prices will plateau for a bit as this is always the way and it will end up like the tax on miners who are going broke anyway.

Why give Scott something to hammer away on let them come up with some ideas of their own like a big tax on fuel so we become less dependent on it rather than building subs to keep it coming.
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Re: Negative gearing

Post by simonl »

· Rents will rise by up to 10% ($2,600) per annum
Sounds like they acknowledge that they might not rise at all.

How do they justify their other claims?
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Re: Negative gearing

Post by boronia »

CCCC wrote:
simonl wrote:Look at the source: http://web.archive.org/web/200709010321 ... 99/006.asp

No mention of land tax. So it doesn't seem that wikipedia is reliable in this case. It's also not neutral - no tax economist would argue that land tax is "unfair".
But in your link he does mention "the abolition of state taxes" Land tax in NSW is a state tax , It was widely used to the lead up of GST to do away with Land tax to get the public on side.
Without doing a lot of research, I am sure that payroll tax was also on the list of taxes that would be eliminated by GST.
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Re: Negative gearing

Post by CCCC »

simonl wrote:
· Rents will rise by up to 10% ($2,600) per annum
Sounds like they acknowledge that they might not rise at all.

How do they justify their other claims?
Partly by looking at the history books , This is what happened when Keating tried to mess with negative gearing before , construction dived and rents went through the roof.
Hawk had to reintroduce full negative gearing to boost housing , it was going to cost the governments billion to fund public housing because private was not investing.

Today some circles of thought still blame this decision from there being a shortage of housing today and not being able to catch up.

Again if they do or if they don't mess with negative gearing this will still not effect a property investor , a serous property investor does not negative gear , they positive gear.
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Re: Negative gearing

Post by simonl »

^ I believe it was when the plan included GST on fresh food.

The renegotiated deal which excluded fresh food didn't include payroll tax, except a promise to "review" it later. They decided to keep it at the review.
CCCC wrote:Partly by looking at the history books , This is what happened when Keating tried to mess with negative gearing before , construction dived and rents went through the roof.
Hawk had to reintroduce full negative gearing to boost housing , it was going to cost the governments billion to fund public housing because private was not investing.

Today some circles of thought still blame this decision from there being a shortage of housing today and not being able to catch up.
Not completely true - you haven't been following the media on this one!

Rents did go up in Sydney and Perth.

In Adelaide and Brisbane rents went down in real terms while being pretty flat in Melbourne: http://www.abc.net.au/news/2015-05-06/h ... ng/6431100

You might also be interested in: http://www.abc.net.au/news/2016-03-03/f ... on/7180812
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