Negative Gearing charade continues in 2018

Sometimes I find this “old car” a little slow to start in the morning, not as fuel effective as I would like, doesn’t have all the creature-comforts of new cars and more and more thing break down, sag and fall off.

But you are right - and it is still a pleasure to ride .

 

Today the ALP (NSW state) blokes held a press conference. In contrast to the previous announcement by Treasury (opening post) that it would reduce house prices in Sydney by 2%, today they stated that Labor's policy of removal of NG and reduction in the CGT discount would make housing in Sydney significantly more affordable for buyers.

I haven't found a link on ABC website, it was shown on TV at lunchtime.

 

A part of me would love them to do that, then fast forward 12 months and watch house prices not significantly drop across the board and enjoy watching rents rise.

 

Yes, there is a time we wanted a super car for its speed, look and eyeballs earned. But then there is a time a super car is fatal to the driver. You won't want something to be super hot in the morning at some stage in your life. Of course if one in the rare occasion wanted to have a quick spin, there's always the luxury and super car rental company. Maybe I should stop at that before getting banned from PC... BTW, I am only talking about cars...

 

So NG changes will only cause a 2% drop in property prices but experts tells us Australian property is overvalued by 40%. What will it take to cause a crash to bring property down to its real value? Nobody wants what happened in the US in 2007 to happen here.

 

A massive oversupply, and Australia would have to become a **** place to live in, all of a sudden. Ain't gonna happen imo. Current value is pretty much its real new value, baring some places which will see some corrections.

Australia is a fantastic and safe place to live in, relative to many parts of the world.

The demand to live in many parts of Australia is massive. The supply can't keep up. There are many cashed up people who are willing to pay the prices to live in the most popular parts of Australia. Moreover, there are many hard working individuals and families who are NOT cashed up, but ALSO willing to make the sacrifices to buy in high demand areas and hold as long as possible.

I believe these values (for the most part though some corrections will occur of course) are here to stay, because many ppl in Australia see value in owning investments and PPORs, especially in popular suburban and coastal areas where no more land is available.

In 3 years from now I bet prices are mostly the same. Some slippage, some stagnation and perhaps some growth in certain areas. No crash.

I should write a book like Mr Dent. Hopefully my advice doesn't make people lose out on millions of dollars like his did.

 

So you are saying Brisbane median house price should be less than 400k? Prices will be the same as 2006.

Or Adelaide (City) should be about 270k for the median house? If so we are talking about less than the price for the Qtr March 2006 (280k). - Source SA.GOV.AU - Median house sales by quarter

Perth you would also be looking at prices back to 2005 - https://reiwa.com.au/uploadedfiles/public/content/the_wa_market/house-prices-2013-web.pdf

 

It has happened in the past. I remember what happened in Victoria in the early 90s. If the market gets spooked values can crash. I don't think it should happen or will happen but it can happen.

 

Better sell your property to me then for those prices..

 

The only "charade" about negative gearing is that governments, both sides, refuse to index the real gains. The intention is to tax investors on gains made due to inflation........which are not gains at all!
Removing Capital Gains Tax concessions is a defacto 'property tax' because the tax is not levied on the change in real value but rather on the nominal gain in property prices.....with no consideration as to the buying power of that money. THAT IS A TOTAL CON.

If this BS gets up I will not be investing in property again and renters will find out what real increases in rent are like when investors abandon the market en mass in search for better returns. it won't be pretty.This is what happens in a dictatorship.

 

So the cg discount is, what?

 

The trouble with the capital gains discount is that it's generally too large.

If someone bought a property for (say) $1 million in 2008, and it's now worth $2 million, then they'd only be taxed on $500K, as the rest is deemed to be due to inflation.

In reality, inflation would have accounted for around $270K (using the RBA's figures), so the investor would get $230K tax free.

Labor's plan to reduce the discount to 25% would make things fairer in that particular example.

Conversely if inflation had been running higher, the investor could end up paying more tax. There's an article at TheConversation that outlines a couple more scenarios.

I think that there are three options:

1. Apply a flat rate discount on capital gains to approximate the effect of inflation. This is the current model.
2. Calculate the amount of inflation due to holding the asset. This should be pretty straightforward, but makes taxes a bit more complicated.
3. Take the view that inflation is low, and remove the discount. This might result in lower taxation in general, depending on what proportion of the take is from capital gains rather than income.

 

Hard to see Labor getting with a 25% CGT discount unless there is other sweeteners.

Is labours plans also to remove all the additional fees an owner of a property gets charged because it is an IP?

Also even if they do reduce the CGT it would likely be grandfathered so owners of these IPs will likely hold onto them a lot longer similarly how there was no CGT previously.

You cannot keep taking from the haves to the have nots and expect the haves to keep trying to succeed. Maybe the have nots should look closer as there are people on the forum who were in the have nots but took risk and made sacrifices to get ahead - however you cannot get ahead if you look for welfare.

 

Floggin a dead horse mate. Those who get it, get it. Those who don't, never will.

 

Don't mind me

 

The banking regulations and policy has changed I don't think the circumstances where banks can force selling at stupid prices will occur again, but who knows, I suppose their will still be F wits running banks. The banks got spooked. Part of the problem was banks encouraging off shore borrowing at very low interest rates with out advising of the risks or offering any hedging. Those very cheap loans became very expensive with changes in interest rates and exchange rates. Very smart investors were brought down and never recovered. Lucky ones fluked bargains and now seem like genius, and now get a 100%pa return on prices paid then

 

You might like to pop down to the library and check out a history book. When CGT was introduced by the XXX goverment in 1985 it was indexed and averaged. The yyy govt removed the indexation and conned everyone into thinking a 'discount' made them better off.

A change in tax rules equals a dictatorship?

 

I would expect these additional costs would still be deductible, as they are now.

Do you think capital gains should be taxed at a lower rate than income?
If so, can you justify why someone earning income through an honest days work should have to pay more tax than someone speculating on price growth of assets?
If not (i.e. they should be taxed equally), can you explain how that would work without reducing the CGT discount?

Those who get it, get it. Those who don't, never will.

 

Your right, I never will nor do I want to

 

I am one of the truly weird Australians who believes that those who take on huge risks to run businesses should be given all the tax breaks possible. My reasoning is that those who rock up to a typical PAYE job do so in relative comfort and ease compared to those who own businesses. I consider owning and operating rental properties is owning/running a business - we acquire capital assets which are leased out to customers who pay us a fee to receive a service. The higher quality service we provide, the more those assets increase in value.

The average Joe or Joanne does not take on millions of dollars of bank finance and the responsibilities and costs associated with that. Am I the only one here who thinks this additional costs could be rewarded by Big Gov, since we are in effect providing a community service (housing) that Big Gov does not provide. This service meets the needs of approx 30% of the population and we are told that figure is rising.