Jamie Alcock on Negative Gearing

I am not referring to grandfathering.

If I make a $10k loss per year on a property for 10 years then at sale I get to reduce my capital gain by $100,000. This makes a massive difference and could mean I pay no tax on the capital gain. Yeah negative gearing is effectively still there, the deduction just comes at sale instead of ongoing. It doesn't really disappear at all.

 

• Deference means conditional to profits at sale. Not the way currently set up where the cheque still comes in whether profit or not at the time of sale.
• The bravado of the NG investors will be seriously tested when Gold pot (CGT) has been halved.
• How many investors will be able to sustain yearly loss without the ATO's crutch ? The crutch has been shifted to the end of the race and is unavailable during the race.
  
• What will happen to serviceability calculators when NG is not there ?

Maybe new to you but not to everyone:

• Heard the real estate agents are running a campaign against NG abolishing. They would not be worried if the investors would carry on business as usual..
• Evidence can exist only after observing the event. Before the event it can be an educated expert opinion at best. Grattan's report would be a good start.

The wonderful mirage of all or nothing.... Obfuscation of self interest (NG, property prices, LVRs, serviceability etc) is expected, especially when you are doing exactly what you despise being done by wealthier (whatever your definition is) investors.

 

Not at all; you are giving us a handwring about how the lower paid folks do it tough, not fair and so forth...noble of course; and believe it or not; I actually agree with you - except to say that even the lower paid folks can climb the ladder if they have the inclination.

You seem mystified, disbelieving and/or incredulous that a $35k employee could get a loan...

 

How come this personal attack hasn't been removed by the mods?

I love how NG discussions inflame the lads.

That is an ignorant statement, of course.

We all know that both the workers and the wealthy work hard...that's a given.

But it's all about choices, and doing the hard yards to go from poorer worker to wealthier worker.

So; you are telling me that when I post a pic about the world-wide human condition of every younger person who wants everything right now; can't wait, impatient etc....you describe it as a Right Wing self righteous snobbery poke at the poorer folk?

Have yo got kids? Have you ever been a kid, a teenager? A young adult? (you get what I mean)...

Not even a teenager - most adults in Aus...why do you think Harvey Norman has 50 month interest free deals?

It's because they have to have the oompaloompa now!

This is why folks on $35k cannot get loans; should we feel sorry for them like you?

Yes; but No.

They have plenty of choices and keep making bad ones...that's not our fault.

Should we lay the boots in? To their faces; no. Offer help and advice and so forth - we all do it in real life out there...most don't listen of course....I personally have given up on trying to help the $35k workers get ahead with my advice.

I used to be one; like almost everyone here.

Can we sink the boots in here? Yep; we are discussing stuff; what we see, what we hear, what we think - it's discussion.

The $35k earners here on this forum will be pleased to hear the various points of view; we are preaching to the converted; they don't feel sorry for themselves; they are not victims who are being treated unfairly at the hands of the evil rich - they are taking action.

They read about the "latte factor" stuff - it's all good - you asked how a $35k worker can get a loan; we told you (and them).

 

How can it be a rort if the Gubb have allowed it to be for the last almost hundred years - except for 2?

If anything; the rort is the opposite way around; the amount of money the Gubb rakes in from every single property transaction - especially new ones - is fantastic; GST, Stamp Duty Rates and so forth.

Stamp Duty is a percentage of every sale - why does it cost tens of thousands to process a property transaction today, when the amount of work it takes to do that transaction is no different to 10 years ago when the property was half it's value (or less).

Has it occurred to any of you NG haters that the Gubb makes far more out of the current arrangement - even with them paying back some of the tax already paid by investors - who are doing what they can (with the ATO and Gubb's blessing) - to better themselves and not be one of those poor sods on $35k who will retire broke and have their hand out, costing us taxpayers even more than a paultry NG amount for a Mum and Dad investor with a couple of IP's?

Do you think the Gubb would continue the "rort" for almost 100 years (barr 2 years) if they were tanking dollars by the truckload?

 

FINALLY someone has recognized that we (younger) evil Baby Boomers actually had it hard back in the 1980s. Our employment history was the same as what the typical gen Y has today - high unemployment, serious underemployment and we went through two cycles in 1980 and 1988 when housing prices doubled in one year. Now you know why we rushed into property investing as soon as our two kids ceased being legally and financially dependent upon us.

 

I learned something new last night on the TV. We watched 4 Corners, as much as I would have probably preferred to chew glass. Apparently the word "privatise" has a different meaning than the one used in the Economics and Business classes I have taken over the years.

 

• It is government approved rort that *******izes the active and passive income and is the antithesis of progressive taxation.
• No other country other than NZ does it,
• NG, CGT, depreciation were recognized as a government approved rort in USA and wound back in 1986.
• Do the following (fake deductions,fake trust based distributions to imported families) read like property related rorts ? These are just quick examples from this site only:

That is what tax is for. Ever used a road, hospital, electricity, water, sewerage, school, public transport, airports, telephone line ?....you allow this rort to continue for a few greedy ones, the whole society will pay the price. Heard of Greece ? That is what happens when governments look the other way when it comes to taxes.

Stamp duty is not a measure of work done but a tax, for state services. The society (government) as a whole has decided that stamp duty is better than state level taxation like USA.

• Statistics please. Read the Grattan report to find out how much the savings will be if the rort is removed.
  
• Labor and greens want it gone. Liberal too till they realized it can be an election issue.
• That poor sod is a greedy ******* who does not want to pull his weight and is pushing other sods onto homelessness.
  
• Once again I would like to see figures to back up the myth on this site that NG and CGT compounded annually < pensions. Do the NGers sign an enforceable undertaking that they will never take pension. ?
• Have a read below of a typical self confession of a NGer speculating on property and depleting taxation pool in every way and then back on the pension heap. Whats next-NG and CGT for pokies ? :

Yes, governments will pander to populism till something gives. As pointed out by @wogitalia a whole generation's homelessness is at stake and as shown by Grattan's modelling the tax evasion has become astronomical hence the political willingness to rein these rorts in.

Good to see something which does not end up blaming the FHB as a distraction.

 

Let me get this straight:

1. If I borrow money, invest in a term deposit, guarantee myself a negative cashflow, have no chance of my cashflow ever going positive, have no chance of my investment ever making a capital gain THEN the ALP will support me and 'subsidise' my investment.

2. But, if I borrow money, invest in an IP, start with a negative cashflow for a few years, have every likelihood my cashflow going positive and remaining that way for many, many years, have every chance of my investment making a capital gain THEN the ALP wants to discourage me.

That makes a lot of sense. That is one party worth voting for.

 

Just because other Countries don't do it; doesn't mean we should follow what they do.

I don't smoke; but lots of folks do....should I follow them just because a lot do? I don't have tattoos; but lots of folks do; should I follow them because they think smoking and tatts are alright things to do in life?

The rest of the world could follow us as far as I'm concerned....a lot of other Countries stuff a lot of things up.,..they are not always the best examples to follow.

If you want folks to invest in property; they have to have a win.

If they can't have a win through the pathetic rent returns we usually have to put up with in Aus, then pretty much no-one on an average income would bother, and/or would not be able to even play the game.

So, what do you think they should do? Shares? Superannuation? Start a business? Fine art? Bank savings? Far easier, for sure.

If I had to shell out for all the usual expenses related to owning an IP, plus all the BS tenant dramas you have to contend with each week; then the rent return has to be attractive....at least double the current interest rate for a start to cover all the expenses and a bit more for myself...otherwise; why bother?

 

Try #1 with the ATO and see how far you get.

 

O dear, Kierank, you left off the sarcasm button at the end. Not everyone will understand your full meaning.

 

A lot of hot air about nothing in this thread, once the coalition are returned to government this thought bubble will be consigned to the historical rubbish bin of bad ideas.

I'll bet Labor will drop this policy post election defeat.

 

LibGS has requested that I publically denounce fraud...

I denounce fraud...and all types of crime...penalties are too lenient across the board.

Happy Lib?

Just on that; I view welfare cheats as far worse than anyone enjoying a bit of NG to better themselves in life...the folks out there having a crack.

How about some of these gutless Pollies get up and scream how they are going to take on welfare cheats and eradicate them?

Ah; but no - doesn't win votes, and Civ Lib protesters will be out in force saying the Pollies are picking on them...victimising the guilty...the ones who are defrauding all of you.....and I.

 

Please explain.

 

Surely, no-one is that dumb.

Or maybe....

 

Sorry,Skilled Migrant, you haven't convinced me that charging my very low-income earning tenant $315 a week to rent a three bedroom property one street back from the beach at Redcliffe is causing an entire generation of young people to be homeless.

 

O well. I might die poor by Australian standards, you know, no iPhone, no plasma TV, no yearly trips to Bali. But at least I have done my bit for helping the homeless.

 

I am doing what the law allows for, and so is every other savvy investor on this forum. I follow the law and that's that. I pay my fair share of tax which I am sure is being wasted on all sorts of nonsense in this country, including many bludgers on Centrelink. So when the law allows me to make use of it in business, its a no brainer.

 

That's the only cherry picked!!
Since the whole world is not doing it maybe we are the smokers and should give up smoking. But greed is more addictive than nicotine.

• Not the tax payer's problem, as investment is an individual's risk/reward evaluation.
• Have an income or profit.. pay your fair share of tax as per individual or business tax structures without the rort.

• If the yields are low and operations overheads too demanding do not venture into the investment. Market will adjust the yield to where it is lucrative for the few savvy ones.
  
• If you do venture into investment wear the costs, do not ask the tax payer to subsidize a speculation.