Data Breakdown of Who Uses Negative Gearing

Discussion in 'Investment Strategy' started by House, 12th May, 2016.

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  1. Sackie

    Sackie Well-Known Member

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    @alexm that's all it takes for most people mate. You don't need to be an Einstein to figure it out. :)

    I know first hand. Like I've said before, I have helped quite a few people on average incomes with young kids, ranging from ages 20-60 years of age, I have helped them buy ppor and also Ips When they were 100% willing to change their attitude and approach and follow through with action, they were amazed at what they were able to achieve and in a relatively short period of time.
     
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  2. emza

    emza Well-Known Member

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    If it really is "beyond my understanding" then I suggest you're not trying hard enough to understand.

    There is a massive conversation going on in our country right now regarding housing, inequality, NG, CGT discount and fairness.

    You can go to reddit and find many people discussing it. You can travel to other forums too.

    Right now it sounds very much like: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”.
     
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  3. Sackie

    Sackie Well-Known Member

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    Well I do understand one thing. Anyone who really wants to own a home and some ips, I know how to help them make it a reality.

    I understand that path very well.

    Carry on.
     
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  4. devank

    devank Well-Known Member

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    Obviously those higher income earners are more likely to be into investments. They will makeup the bigger slice of property investors. Hence, naturally they will make up the bigger slice in negative gearers as well.
    Take a look at the people who lost money in share market. I'm sure the order of profession would be very similar.
     
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  5. emza

    emza Well-Known Member

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    Whoosh...
     
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  6. Jasmine

    Jasmine Well-Known Member

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    It would be a step closer to level the playing field between investors and FHBs. Removing NG would make IP a less lucrative financial instrument.
     
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  7. Sackie

    Sackie Well-Known Member

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    In order for FHB to buy a place they need to have strong savings skills and also realistic expectations for their first place which they buy.

    Making property 'less lucrative' will not suddenly bring the prices of dwellings down 40-50% so the issue remains.

    1. Strong saving habits,
    2. Realistic expectations for a first place.

    Just my opinion.
     
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  8. ashish1137

    ashish1137 Well-Known Member

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    With due respect, it will not.

    Investors are far better placed to get the deals which FHB may not usually get.

    FHB might extend to certain limits in order to get a desired property, investor on the other hand, will target a cheaper deal.

    FHB will be skeptical to move into a house that needs a bit of work, investor will find an opportunity there.

    FHB will target a specific suburb, investor may target a different state altogether.

    So comparing FHB and an investor is like comparing apples to oranges.:)

    Regards
     
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  9. Perthguy

    Perthguy Well-Known Member

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    I have seen some of that conversation. Punters naively believe that abolishing negative gearing will reduce property prices. But will it? Where is the evidence for this?

    I don't support NG in its current form but I am yet to see any proposal for changing the current system that makes the system fairer. For example, under the Labor proposal for winding back negative gearing, high income investors will be the big winners. They will continue to be able to effectively negative gear residential invesment properties while lower income investors with maybe a residential IP or 2 will not. Lower income investors will be the losers under the Labor plan.

    With changes to super for higher income earners on the cards but the option available to effectively negative gear residential property, where do you think the higher income investors will invest their money? At no stage do I see the Labor changes to NG reducing property prices.

    A different approach entirely is needed. One that is fairer and does not create a greater advantage for higher income investors and massive disadvantage for lower income investors.
     
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  10. Hanison

    Hanison Well-Known Member

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    In my opinion.

    Having a job, being employed and having another person provide that opportunity for you. To feed yourself, to shelter yourself, to buy luxuries and entertain yourself as you wish.

    Is a privilege, not a right.

    The same goes for home ownership.

    A privilege, not a right.

    I agree with those that argue it is a basic human need. It is a human need.
    But I feel some people in Australia see the housing situation from a want perspective. They want to live in a new or near new property, they want to live near or in CBD centers, they want shine, they want glitz, they want architectural details and a pool. They want it all and they want it now.

    Stop for a moment and consider the people in this world today living in make shift homes, on dirt floors, in jungles and on deserted islands. Who can only dream of having the privilege of living with the wealth and abundance that this great country can provide.

    This whole attitude that the world owes me something is beyond ridiculous now.
    Open your eyes, change your regressive attitudes and start seeing the opportunities that just being alive, healthy and able in Australia can help you achieve.

    Having traveled to various parts of the world. I know for sure things could be a hell of a lot worse.
     
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  11. Jasmine

    Jasmine Well-Known Member

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    Interesting... I did not refer to bringing the price of dwellings down up to 50%. I know it's your opinion, but do you think on average dwellings are up to 50% overpriced?

    I was referring to a scenario where FHBs were not being outbid by investors at Auctions / Private sales at the current rate. I also believe that your #1 and #2 are non issues. People save up before shopping for a dwelling, and they shop where they can afford.
     
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  12. Sackie

    Sackie Well-Known Member

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    They wont even be able to get to auctions because they don't have the deposit. The FHB who DO have deposits and miss out in auctions generally will go to more auctions until they nab one.
     
  13. wylie

    wylie Moderator Staff Member

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    I was told by one of the cleaners at a large shopping centre over a year ago, that she was on $35 per hour (toilets and general cleaning). I was working for $23 per hour in retail. I know someone who runs a cleaning business and it is quite lucrative.
     
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  14. LibGS

    LibGS Well-Known Member

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    Of course people want to live near the CBD if that's where jobs are. Especially if they are parents. Decentralise job creation and watch prices tumble in the inner/middle suburbs.
     
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  15. peastman

    peastman Well-Known Member

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    For what it's worth,

    it is not difficult to demonstrate that apples and oranges can, in fact, be compared (see figure 1).

    [​IMG]
    Figure 1. Granny Smith Apple and Sunkist Orange

    Materials and Methods
    Both samples were prepared by gently desiccating them in a convection oven at low temperature over the course of several days. The dried samples were then mixed with potassium bromide and ground in a small ball-bearing mill for two minutes. One hundred milligrams of each of the resulting powders were then pressed into a circular pellet having a diameter of 1 cm and a thickness of approximately 1 mm. Spectra were taken at a resolution of 1 cm-1 using a Nicolet 740 FTIR spectrometer. Figure 2 shows a comparison of the 4000-400 cm-1 (2.5-25 mm) infrared transmission spectra of a Granny Smith apple and a Sunkist Navel orange.

    [​IMG]
    Figure. 2
     
  16. Azazel

    Azazel Well-Known Member

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    B+ for effort!
    But you know there was a normal list published not long ago too.
     
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  17. emza

    emza Well-Known Member

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    Why will high income investors be able to NG? It will only exist on new builds and not established if Labor gets in. Or are you referring to something else?
     
  18. EN710

    EN710 Well-Known Member

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    Don't quote me on this but i think its because current property with NG will be grandfathered so technically nothing changes on that side.

    Current people in the market who looks for their first investment e.g. some who might even think to move in as PPOR would no longer have NG benefits, so it is actually harder for them to get into the market. Thats my take
     
  19. Perthguy

    Perthguy Well-Known Member

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    The key word in my statement is "effectively". So high income investors won't be able to offset a residential investment property loss against their personal income but they will be able to offset it against income from shares (dividends) or income from other listed securities.

    A high income investor (if they are smart) will most likely have a diversified, cash generating, portfolio. Since they will be able to offset losses from a residential investment property against that income, it would make it very attractive for them to add some negative cash flow, high capital growth potential, residential investment properties to their portfolio. Note that this is not negative gearing, but from a tax outcome for these individuals, it amouts to virtually the same thing. It seem clear that the amount that higher income earners will be able to put into super is going to be restricted so that money will be invested somewhere. Taking ordinary investors out of the market for residential investment properties will create less competition and it could be that at least some of those properties are bought up by higher income earners as a new tax shelter for the money they are no longer allowed to invest in super.

    Next look at mum and dad with a residential investment property or two and pretty much nothing in the way of other investment income (my parents for example). They will be a lot worse off because they won't be able to negatively gear and won't be able to offset the loss from a rental property against other investment income.

    This policy is really a free kick for high income investors and a kick in the teeth for lower income investor. Surely there is a way of restricting negative gearing without creating this inequity. For example, how about a cap on the amount of a rental loss that can be claimed?
     
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  20. emza

    emza Well-Known Member

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    Sorry, isn't this the link that will be broken if Labor make their changes?

    The residential losses will not reduce their other taxable income.

    Without NG and the CGT cut, people can still gamble on high capital gains (so they could lose $20K a year if the property is appreciating $40K a year) and I suppose a wealthy person could carry those losses longer but why would they?

    Is this what you mean?