NSW Planning Minister- Negative Gearing is Bad Mmmkay

Here we go again

NSW Planning Minister Rob Stokes lashes out at negative gearing

 

Easier to distract the masses with negative gearing instead of addressing the elephant in the room- excessive population growth. You never hear the Government or much of the mainstream media talking about the demand side of the equation it is always about 'supply'.

 

Trust me, I'm a Doctor!

 

Pity he's not an accountant because you don't get a tax deduction for a holiday house.

A property has to be rented out or available for rent to get the deductions.

 

Once you start to analyse the various levels of demand for many of our markets around Australia and the underlying reasons for that demand you will come to the conclusion that prices are basically reflecting the demand and what is 'expensive' is relative to the underlying demand. So the question becomes how stable is the overall demand for real estate in Australia. I would argue it's quite stable. Doesn't mean we won't see dips, flat periods, declines etc because those periods are normal. But as long as the factors that make the demand strong are still at play, then the stability of demand for real estate in Australia will be high.

I think the biggest asset which makes the demand for real estate in Australia so stable is Australia its self. 'Australia' and what it represents to many, is its own biggest asset to date.

 

Trump has them all spooked - these sook fools we have, even Turnbull was going on about the "elite" (he says a leet) media in regard to the ABC, shows how clueless he is on our media vs US puppets.

So you see them all now, crossing the floor etc, arguing more, speaking out, they have no clue how to deal with the dis satisfaction & carry on as if it is just a recent fad, clueless it seems as an as reactionary as ever.

I like the way it is a NSW Lib, how does this nong think they have any of the money they have, kill the goose that lays the golden eggs, then watch them all try and figure out just where it all went wrong. And the holiday house, what a classic, can he be such a fool or just stirring the pot ?

 

Not the only Liberal to have spoken out against Negative Gearing, there have been quite a handful.

I would predict Negative Gearing has less than a 10 year shelf life in its current fashion and more likely less than 5 years.

It looks like Labor is likely to keep the Negative Gearing policy changes in play for the next election. And given how close the last election was and how poorly the Coalition have performed in polls since then, there are good odds that the next federal government will be Labor.

I think Capital Gains will be the next major Tax Policy to be looked at after Negative Gearing. I'd expect changes to it too <10years.

Neither policy will change the way I invest.

 

The Labor Negative Gearing policy is a Capital Gains Tax policy.

 

This is really just a distracting manoeuvre by the NSW government. We all know that NSW rakes in huge amounts of revenue due to stamp duty, which was one of the inefficient taxes that was supposed to be removed as a consequence of the introduction of the GST. Abolishing stamp duty in its entirety for first home buyers would significantly reduce the entry cost into the market for first homebuyers in Sydney.

Stamp duty (and CGT) also act as a drag on economic activity. These taxes dissuade downsizers and upgraders moving out of areas where first home buyers want to live ( to be close to their employment ) and therefore suppress stock on market. I think CGT is a fair tax and should be retained, however stamp duty should be signifantly reduced or abolished for PPORs. Maybe just retain stamp duty in some form for investors.

 

A move to create a pain in the neck for some colleagues !

 

Maybe not.

 

C.G.T doesn't dissuade downsizes or upgrades because they are exempt. Stamp duty does.

It's easy to say the government should get rid of Stamp Duty but they are going to need to put something in its place. In NSW Stamp Duty on property transfers is raising $8B/year. That would devastate the budget to give it away.
Most likely long term they might do as the ACT have done and start a transition to Land Taxes.
The other significant issue affecting down sizers at the moment too is that it's included in Pension tests, etc.
If they changed to Land Tax & counted PPOR in the pension tests, then it would make sense for people to down size as rather than pay a fat chunk of Stamp Duty they would instead pay reduced Land Tax.

 

The reason is not population growth - Sydney is one of the lowest density cities in the world of its size. It is the result of successive decades of poor town and infrastructure planning. I've only been here five months but I get surprised every time I see these massive (very unoccupied) skyscraper apartment buildings in the middle of nowhere and many seem to think that this is the natural and inevitable result of a large population.

This is Athens (population density of 17,000/sq km). No big skyscrapers to be seen anywhere - mostly medium density.


The below is Paris with a population density of 21,000/sq km. Again, largely medium density.


Sydney currently has a population density of 380 people per square kilometre.

If the city was well-planned and designed to have an overall density of say 3,000 people per square kilometre, we could use one-tenth of the current land area. This would make the property prices more even and less exaggerated. To use a suburb in Sydney as an example, it would be the equivalent of Ryde. I am yet to venture over there but according to Census stats, two-thirds of people here live in either a house or town/terrace house. You can see the figures for all suburbs on the ABS website if you don't like that example - there are many. To say it's just population is simplistic - we could have prepared far better for this eventuality.

 

Just heard rob stokes speak on abc and he's switched on to the issues, as you would hope. But funny how journalists always try to ping property experts about investors and oversupply overstatements.

 

I would like someone to compare the taxes in Australia vs NZ
In NZ
No Stamp Duty
No Land Tax
No Capital Gains Tax
Lower top tax rate at 33%
Super not means tested

Was this all achieved on a 5% higher GST ??

 

What about tax as a % of GDP? Australia is lower than New Zealand.

New Zealand might have a Top Tax Rate of 33% but you pay higher tax at the lower margins due to no "Tax Free Threshold" which makes the benefit deceptive.

As a family, Australia also has more attractive Family Tax Benefits and Child Care Rebates.

So it all comes back to individual circumstances whether you benefit more under one system than the other.

Had a brief look at their Superannuation Scheme, ours is way better.

 

Yes you are 100pc right ...look at your circumstances ... choose the best
Choice NZ or Australia May 2016 investment ...difference in year one a tad over a million saving (stamp duty, land tax , income tax )
.(Circumstances is for taxpayer on a taxable income of $2m ...no family benefits)

 

Must be other reasons this taxpayer regardless of the above still chose to continue to invest in Australia? Tax is only one consideration. There's a few countries out there that will let you pay no tax.

 

Hk ...no tax on interest . ..dividends ....15pc on property ...no CG

 

Seems if you are a foreigner you have to pay 15% Foreign buyer stamp Duty + 2x's the regular rate which scales with value (1.5%-8.5% for a foreigner). So stamp duty is between 16.5 % and 23.5% apparently.