Negative gearing changes

To make things even more confusing...

You will be able to negatively gear new investment in established homes if you have investment income you can offset it against.

Hooray for Labor's two tier investor plan

 

How do you define a "benefit"? I see a benefit as something perhaps unearned, such as first home buyer's grant, or baby bonus or something like that.

A tax refund when you have previously over paid tax, is not a benefit.

But I would like to get your sense of what a benefit is so we can get on the same page.

Cheers,
John

 

Like Family Tax Benefit Part A and Part B .

 

Tax free threshold

 

Quote..
"This allows it to come in at a quieter time in the property cycle — obviously Christmas and New Year being a quieter time — a good smooth time for implementation," Mr Bowen said.

Labor would scrap negative gearing for new investors by January 1

 

So if labour wins,
demand wise a dead cat bounce from new investors rushing to lock in before jan 1st and then ... long term bear trend from investors side in existing dwelling market?

keeping in mind, the long term implication, of investors absence in existing dwelling market due to CGT and NG changes, atleast price wise,
will existing Investors offload some of their holdings in this potential surge in demand before jan 1st?

 

I'm sure this question has been answered but in regards to the changes being brought in Jan 1st is it only grandfathered for existing investment properties or all properties currently owned in general. We plan on converting our current PPOR into an IP, would we need to do this before Jan 1st if we wanted to negative gear or would our property be covered by the grandfathering clause?

 

This is something interested in too but I honestly wouldn't expect exemptions as ppor will not be advertised as available for rental (intent) and it's not obviously being rented out and thus no grandfathering. Will be interesting to see legislation.

 

We are all guilty of selective delusion I guess ,I know I do...But it just depends on what media ducks are quacking away at other media ducks ,and as I read very few newspapers I would not know..
But as I have been through several recessions in my investing life ,all the signs are out there to see for anyone
as every shopping outlet I go too most are one quarter vacant unleased ,could be just online shopping could also be all those they went into business blind ,did not understand between how they qualify personal expenses
and legitimate business expenses ..
With Labor,every business owner I talk too,as most have been through several recession's think Bill the man for the people has 2 chances of opening the Lodges wine cellars ,#### all and none..

 

True, just had a read of Positive plan to help housing affordability and near the end of the page:

"From a yet-to-be-determined date after the next election losses from new investments in shares and existing properties can still be used to offset investment income tax liabilities. These losses can also continue to be carried forward to offset the final capital gain on the investment."

So as i interpret that- if you had a share portfolio with 10k of dividends/yr , you could then pay nil tax on that 10k if you had a 10k loss on an existing property that year?

 

My assumption (and only assumption) is that it will be simply based on contract date of a given purchase.

- Andrew

 

The PPOR->IP conversion hasnt been covered at all. The articles only say if you own investment properties or are negatively geared you can continue so. And a PPOR doesnt cleanly fit the former and definitely not the latter. Good bit of business for property managers if theres a surge in Owner occupiers switching their homes before January just to grandfather benefits. Kick out the tenant in Feb and bask in the glow of gaming the system. Downside is diluting 100% CGT tho

 

This is what the labor government expected to bring down back the property price to a reasonable price so the majority of the people can afford to get into the property market.

 

It will never happen. People who don't own homes is mainly due to their own excuses and lack of any discipline. There are currently many affordable markets in WA, NT, SA, QLD. And yet no massive jump in home ownership from renters.

 

Are you looking at price only ?

Or worthwhile to look at cost of holding.

So when interest rates are 10% and property price is $400k

Vs

Interest rates at 4% and houses prices at $800k

 

How about all those people that bought at $400k at 10% and watched interest rates come down to 4%.
How would all those that bought at $800k at 4% deal with interest rates that rise back up to 10%
Fact is the probably wouldn't be able to hold, because they paid to much .
Even if rates only went up to 7.5%, many investors and owner occupiers would collapse.
Yet just over 11 years ago many were paying 9% .
Its a slow race to the bottom , and every time we hope that rates dont go up, until we scrape the barrel and we can no longer drop rates -then what?,

 

Fact check: Did abolishing negative gearing push up rents?

 

And history will repeat itself in Perth as rents go up again.
But we all know thats because the rental market is tightening up.
Never let the truth get in the way of a good story .

 

In a world with low inflation everywhere, how IR can go back to 7.5% without massive wage growth (which indeed will push inflation higher).

 

falling prices triggering rating downgrades, increasing risk premium,
heavy reliance on foreign capital and rising global yield?

besides 7.5% is more normal MR, 4% is an outlier.
the real problem is the size of mortgage debt is now so high(frothy segment) that even a long term normal MR is looking increasingly difficult to sustain,
welcome to the other side of leveraged trade.

when debt as high as we have, bit of inflation is good,
high debt with low inflation is absolutely disastrous..