Property market not geared for Labor negative gearing ban

Your property lemonade will be grandfathered . And if it’s imputation lemonade you are talking about, your lemonade will not change - but the bottomless cup of free refills may .... if they win and if they can get it legislated .

 

Not true.

Some of our IPs are owned via trusts and they are cashflow positive. If ALP gets in, they have stated trust income will be taxed at 30%. Not clear/sure whether “franking credits” type arrangements will be allow for trusts.

I am planning for the worse and have a plan to reduce our trust income to zero.

So, no income, no tax and I keep my lemonade .

Not true.

I understand our SMSF which was in pension phase before 28/03/2018 will be protected but what about shares in our trusts?

Hopefully they are big IFs .

No matter, I am developing plans to protect my lemonade just in case the ALP wins, as originally posted .

 

Big call!

Sportsbet are paying 1.13 for a Labor win. Bookies are in the business of calculating odds

 

Us election bookies were paying x6 if Trump won= on the day of annoucement.

 

So what about liberals announcement about 5% deposits for first home buyers? Any impact?

 

Good news for the industry , might even kick start a boom in somewhere like Perth and stop prices falling in Sydney and Melbourne , but the devil will be in the detail, give it 6-12 months any savings for FHBs may have been eaten up by increases in house prices .
And they still have to pass serviceability requirements by the banks.

 

One thing to consider for those of us who invest and will continue to do so is that from here on (and assuming changes pass the senate which, frankly, I don't think they will in their current proposed iteration), is that investors will need to focus more heavily on cash flow than every before and balance their portfolios.

The unfortunate reality is that the average person thinks of negative gearing as a strategy and it's not, it's simply a tax outcome based on a number of variables. The same property could be negatively geared for one person and positively geared for another. So, what that means is that if an investor now has $X amount of dollars to spend they will need to plan a better cash flow game by balancing positively geared properties with what would have been negatively geared properties in isolation previously. Remember, the proposal is simply preventing the write off of losses against personal income, not write offs altogether.

If you can get a portfolio to a position that is making profit then your next purchase can realise a loss in isolation against itself, but still be neutral across the portfolio by deducting those losses against the positive income from the rest of the portfolio. It's how I've always run my own to ensure I'm in a strong cash flow position. Of course, previously you could also run a positively geared portfolio into the red using depreciation anyway (for those of you who aren't aware, this isn't 'free' money - the cost base is adjusted at sale by any amount you've claimed).

Overall the pencils will have to be sharpened and if rents rise, it will make owning multiple properties safer and easier to manage for a lot of investors who probably relied a little too much on heavy personal tax offsets to manage their cash flows in the past.

- Andrew

 

Looks like govmt is proposing to guarantee the 15% getting the FHB to 20% from 5%. With a cap on purchase price. its a good idea. Does not mean they wont have to service 95% but is good news for investors as it would serve to support values of investment grade stock

 

Sorry if this has been posted elsewhere:

How negative gearing property investors pay tax into government coffers: PICA

"New analysis by the Property Investors Council of Australian (PICA) has detailed just how much tax typical property investors pay to governments under current negative gearing and Capital Gains Tax (CGT) rules.

PICA chairman Ben Kingsley said the council’s modelling showed an average Mum and Dad investor was adding hundreds of thousands of dollars to the public purse over the lifetime of a single investment property."

...​

 

@hammer

Was my call good ?

 

Analysis by non-independent group is not worth the HTML it was written in. It's like a report, you don't commission it if you don't already know the outcome.

Negative gearing isn't bad, IF capital gains are taxed at the same rate as income and there isn't perverse tax rates for certain segments of the population (retirees).

 

I should have put a wager down.

I'm very relieved today.

But I didn't believe Australians would allow Bill into the lodge.

Now that he handed his resignation I'm relieved.

 

Yes. Yes it was!

 

No need for grandfathering now.

 

Pretty sure last election Labor went in with murmurs of removing of NG..this election they've lost with this as a clear pillar of their campaign. NG is not going away for a long time to come..

 

if sydney and melbourne markets were still peaking, it would be a different story...

 

Neg gearing isn’t bad....cgt discount is.

 

True. Narrative in the last year or so has completely turned.

 

You made a good call. Well done!