CGT discount to be axed

Plan to cut capital gains tax discount for property investors, not negative gearing

Dont know if this has already been shared or not.

 

It mentions in the article that this is "seizing the mantle" on property investing, but wouldn't this encourage more buy and hold strategies, and less fluidity in property, and pressuring prices more?

This is especially if negative gearing isn't scrapped, as investors should be incentivised to fill homes with tenants, and not leave them empty and be subsidised by the tax payer.

 

And as was pointed out on ABC this morning, increasing CGT will discourage investors from trading properties with a knock-on effect on stamp duty dependent state budgets.

 

I think a lot of states are looking into replacing Stamp Duty with a broad based land tax.
It's just a question of timing. Once the Stamp Duty windfall ends, I could see a few moving.

 

i think it is a great idea. not from a tax perspective but if your passive asset is taxed the same way as a trading stock asset then it may encourage more people to undertake development activities.

not necessarily a bad thing

 

I think SA is looking at it, ACT 4 years into the program to phase out in 20 years
so each year stamp duties is reduced and rate increase.

I think the current environment is as good as it get for properties investors
going forward I can only see winding back of CGT and Negative gearing and higher land tax and rates.

I think they better off, offer CGT concession for people who actually developing/building properties that way the capital get feed into the economy and create activities and jobs

 

Good to hear what's finalised. Issue I see is different set of tax rules compared to shares. Any tax that affects return (investors)will send people elsewhere chasing better returns. I reckon shares will bubble. Lucky I started buying up now.

 

I assume it would be grandfathered.

It might also be a measured approach??? e.g. CGT concession caps.

 

BUBBLE!!!!

 

Your mate Lindsay has 10 months to prove himself right

 

Don't you mean leading economist?

But time is up for one prediction. It's 2017.

"We have 300 cranes in the sky over Sydney building new apartments. I don't think there's a city in the word aside from Dubai with more cranes," says Lindsay David, co-founder of LF Economics and author of Australia: Boom to Bust.

"The cracks are going to start to appear next year, once all these new dwellings under construction in Sydney, Melbourne and Brisbane come online and there won't be anyone to rent them. It's going to get messy," he says, predicting a bloodbath by 2017.
​

Is Sydney really in the grip of a housing bubble? - BBC News

As for the other prediction, remember the Crash is also going to take out one of the big 4 banks? Hope you are not holding shares in any of the big 4.

Correction: a big 4 will go bust, be nationalised or be bailed out.

Tick tock!

 

Wouldn't it be best to reduce property prices and reduce rental pricing pressure by taking the following steps:

1. Increase land tax slightly
2. Reduce stamp duty
3. Remove or revise negative gearing
4. Incentivise supply of new homes through policy

and other steps that align with the goal of improving the stock, and minimising the "waste", for e.g. an investor who has an empty home sitting somewhere..

 

^^^ This.

There is a 4x2 home near an IPs that I have owned for over 5 years. The home has never had an occupant. How can we have a housing shortage and vacant houses? This is a nonsense. Instead of playing politics, the government should make some real policies in this area.

Ireland:- Consider penalties for owners of long-term vacant properties in areas of high housing demand. (1)

UK:- London landlords face penalties for empty flats (2)

Australia:- Let's abolish negative gearing to make housing more affordable (3)


(1) https://www.housingagency.ie/getatt...6-05-17-Vacant-Homes-Paper-Housing-Agency.pdf

(2) Subscribe to read

(3) Positive plan to help housing affordability

 

There are numerous proposals running a round. The UK introduced a range of buy to let measures which target spec investors and Australian has to have looked at modelling these issues. Treasury always model ideas to find what has minor technical problems and what will benefit economy v's tax leaks....Just some over the past few years I have seen....

- Abolishing CGT discount here has some merits especially shorter duration ownership. Perhaps a phase in? I would argue there would be zero grandfathering. It would change ON budget night if it happened.
- Abolition or reduction (lifetime cap ?) of the full main residence exemption. Said to be a far greater tax concession than adding up all else. Integrated with super a rollover to super could be permitted to encourage retirement savings of (home) property profits. [Personally I liked that one]
- Changing land tax and duty systems (too hard basket)
- UK type changes to neg gearing that cap, limit or scale back deductions
- Broader based withholding at the agent for more sales and more rental income eg all foreign owned property
- Changes to depreciation concessions eg They only reduce income but cant create a revenue loss.
- Changes to CGT rules
- Capped negative gearing
- Poll taxes (based on occupancy numbers)
- Vacancy taxes to stimulate derelict areas and vacant property use for housing
- Changes to regional laws to stimulate or reduce certain property use eg AirBnb etc.
- Land tax surcharges
- Stamp duty surcharges
- Granddfathered neg gearing and no new property losses are allowed
- Limits based on property numbers or a set $ limit per taxpayer
- Super borrowing
- Using super to help buy a first home
- NRAS like incentives
- Regional incentives to stimulate regional growth and jobs
- Supply policies at council and state levels.. Danger is some regions have low supply and stimulus can escalate speculation affecting prices eg Sydney !!
- Transport and infrastructure to assist growth eg Sydney railways and airports.

 

Over. Didn't even last a day.

Malcolm Turnbull rules out changes to capital gains tax or negative gearing

‘The only party with a commitment to increasing capital gains tax and abolishing negative gearing is the Labor party,’ PM says​

Malcolm Turnbull rules out changes to capital gains tax or negative gearing

 

Too many powerful lobyists to change the status quo.. Many of these things have been talked about; been recommended by well regarded studies, yet nothing ever changes.

 

Easiest tax to avoid - don't sell.

And I guess the implementation of this kind of silliness will mean - investors won't sell.

This not only doesn't fix the supply problem, it exacerbates it.

 

Buy and sell is part of my strategy. If CGT was changed I would change my strategy and buy different properties that I would actually want to hold. So would other investors. Competition for those properties would increase, driving up prices. Once investors got them they would hold, restricting supply, pushing up prices further. Fewer people would want the lower quality properties, so prices would fall. It would create 2 tiers of properties. The haves and the have nots.

 

Which could create a cool reno market, converting tier2 to tier1 properties?

 

The news this morning is that the idea has been scrapped again.

Back to work!