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GST what if 15%

Discussion in 'Development' started by MTR, 6th Nov, 2015.

  1. MTR

    MTR Well-Known Member Premium Member

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    Just had an ugly thought, if GST gets raised to 15% and I think it will more likely happen than not... ...its going to hurt developers who sell stock.

    I have just sold 6 villas/townhouses in total over the last 2 years.

    I don't think it would be viable to sell them all if GST hits 15%.

    However, after 5 years no GST so perhaps the plan moving forward would be to only sell 1 or 2 or just sell after 5 years.

    MTR:)
     
  2. spludgey

    spludgey Well-Known Member

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    For us "wealthy" people on PC, lifting the GST would likely beneficial. Poorer people actually pay a higher percentage of GST than wealthier people due to the lower saving/investment rate.
    So make of that what you will, I personally think that broadening an increasing the GST is not a great (or fair) idea and will speed up the destruction of the middle class.

    As for what it means for developers, I'm not really sure. Hope you don't mind me posting my more general views in this thread.
     
    MTR likes this.
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Where GST is specified as 10% in various contracts one party could lose out - the one liable for the GST. Contracts should allow for rises in GST automatically by the definition of GST.
     
  4. wombat777

    wombat777 Well-Known Member Premium Member

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    It will be interesting to see how an increased GST combined with income tax cuts will effect serviceability calculators.

    Do you think there will be any gain or loss of serviceability or will the impact on consumer costs and IP expenses cancel out any serviceability 'benefit' from the income tax cuts?
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The living costs will generally rise. That will effect the base calculation for servicebility as the lenders assume the borrowers are spending at least a certain amount.

    But if income tax rates come down that will effect net income available to service.

    This in turn will effect negative gearing type calculations.
     
  6. Graeme

    Graeme Well-Known Member

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    VAT in the UK runs at 20%. The sky hasn't fallen in.

    There are a few differences in how it's levied. I believe that new dwellings are exempt, though work on an existing property isn't.

    From a taxation perspective, it makes it harder to avoid. The downside is that it'll disproportionately affect the poorer members of society as they tend to spend more than they save. The rich are the other way around.
     
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  7. Scott No Mates

    Scott No Mates Well-Known Member

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    It doesn't much matter what the rate levied if there's no enforcement by checking invoices are issued to every client. No invoice both parties get fined for evasion.
     
    Last edited: 7th Nov, 2015
  8. D.T.

    D.T. Adelaide Property Manager Business Member

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    This is why I like keeping new builds :)
     
  9. Biz

    Biz Well-Known Member

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    It would help existing stock close by to new developments. Suddenly the new stock will be 5% more expensive which will put more demand on established product increasing prices.

    A new cookie cutter mcmansion selling for 700k in Western Sydney would increase by another 35k...
     
    Last edited: 7th Nov, 2015