If Negative Gearing was Scrapped!!!

Discussion in 'Property Market Economics' started by Johann_, 17th Feb, 2016.

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  1. Cactus

    Cactus Well-Known Member

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    Do you really believe that?

    In any case as I said in one of the earlier topics on this I am not too fussed with what they do to NG though I would prefer they didn't alter CGT too much. And if they grandfather I will be happy.

    For me I would look at any changes as an opportunity to re-strategise and profit from the changes.

    As a developer and as a consultant to developers I would benefit massively from NG only on new builds. Go figure!
     
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  2. Azazel

    Azazel Well-Known Member

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    If they did get rid of NG, they would have to reduce stamp duty and CGT to balance it out.
     
  3. Cactus

    Cactus Well-Known Member

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    The talk has been about increasing CGT not reducing it.
     
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  4. Azazel

    Azazel Well-Known Member

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    They won't do both.
    I guess Shorten's popularity couldn't get much worse.
     
  5. Cactus

    Cactus Well-Known Member

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    Both Libs and ALP have been discussing reducing income tax and stamp duty but removing NG and reducing or abolishing CGT discount on property held over 12 months.
     
    Last edited: 19th Feb, 2016
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  6. Azazel

    Azazel Well-Known Member

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    Together?
    There's no way they agree on anything.
     
  7. Perthguy

    Perthguy Well-Known Member

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    I would be happy if they abolished Capital Gains Tax. It's a terribly inefficent tax. ;)
     
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  8. radson

    radson Well-Known Member

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    Im open to the idea of indexing it to inflation, so that only real gains are taxed.


    edit
    inserted only
     
    Last edited: 19th Feb, 2016
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  9. Redom

    Redom Mortgage Broker Business Plus Member

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    Not sure about this, but i thought thats how it worked years ago. The complexity cost was a pain, and hence they chose a simpler 50% number.
     
  10. radson

    radson Well-Known Member

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    Fair enough :)
     
  11. Perthguy

    Perthguy Well-Known Member

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    I don't know 100% either but my understanding is that the original method for calculating the CGT discount was implemented when there was high inflation. The change to 50% was implemented at a time of low inflation because the high inflation method didn't translate to a low inflation environment. Also, the 50% method is simpler.
     
  12. Cactus

    Cactus Well-Known Member

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    Hahaha. I worded that a little wrong. Will edit

    But I agree I would be happy too.
     
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  13. HUGH72

    HUGH72 Well-Known Member

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    Malcolm Turnbull has gone on the attack this afternoon stating that Shorten's policy would affect property prices negatively for ALL owners, including that protected species the "home owner".:p.... When that realisation sinks in, whether it's valid or not it might be the political death of this policy.
    Interested to hear Shorten's response.
     
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  14. Perthguy

    Perthguy Well-Known Member

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    I am liking this propsal less and less. I really want a development site in the City of Belmont in WA. During the mining boom and because of this and a number of changes to local government and State Government policy, a property bubble formed in City of Belmont development sites. Based on actual sales, at a $/per square metre rate, prices have dropped 30% from the peak. However, end values of completed dwellings has also dropped, leaving the development sites overpriced. I need the prices to drop further for the numbers to work.

    This is my concern with the Shorten proposal:
    - retaining negative gearing for new dwellings will push up the price of new dwellings due to increased demand
    - higher end values will make development sites more feasible, pushing up the price of development sites

    That's not the outcome I want so I am not supporting the changes. Of course it is all about me! :) :D
     
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  15. wogitalia

    wogitalia Well-Known Member

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    I don't disagree with the sentiment that high tax on high income isn't the best system... but if you're going to operate a marginal tax system it runs completely contrary to common sense or basic logic to then design a superannuation system that is part of that tax system that is specifically designed to allow those paying at the highest marginal rate to instead shift large amounts of their wealth so that it is taxed at the lowest marginal rate or not at all. Completely counter intuitive to the entire marginal tax system (the whole marginal tax system is a whole different story!). Superannuation is a broken system as it is currently implemented, which is a shame because it's fundamental basis for existence is great.


    If wealthy people want to leave a house that is already losing them money empty so that it loses even more money, so be it, I dare say with that attitude they wont be remaining wealthy for too much longer and then they'll be forced to sell under duress anyway.

    And if a property owner wants to let their asset fall into disrepair just because they aren't getting a taxpayer funded subsidy to fix it, which would ultimately lead to the place being unfit for living and thus losing more money so that they're forced to sell then again, I'd argue the change is doing exactly what it should be doing.
     
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  16. wategos

    wategos Well-Known Member

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    Will be very easy to demolish Malcolm Turnbulls arguments, they are very misinformed. If he continues to try to defend negative gearing in its current form I think you'll see him go down in flames over this issue as his self interest and lies are exposed.
     
  17. LibGS

    LibGS Well-Known Member

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    Why would they drop? The implication is that house prices have artificially risen under NG. I'll be fascinated to see his response to this :)
     
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  18. gman65

    gman65 Well-Known Member

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  19. HUGH72

    HUGH72 Well-Known Member

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    I didn't suggest they would but its a possibility.

    Nothing artificial about it, its a market like any other with fear and greed.

    Perception is reality in Politics and Shorten is a dead man walking.
     
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  20. Ed Barton

    Ed Barton Well-Known Member

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    Yes, the cost base was indexed (losses were not indexed) by CPI if the asset was held for 1+yr. It was also 'averaged'. 20% of the gain was added to income, tax worked out on that and then multiplied by 5 to determine the CGT.

    It was only complex if you failed grade 9 maths.
     

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