Smats - May 2019 state of the market update

Discussion in 'Property Market Economics' started by Dean Collins, 31st May, 2019.

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  1. Dean Collins

    Dean Collins Well-Known Member

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    Great that Steve points out about the expat LTCG 50% discount being removed and how state/fed’s are going a little crazy with foreign citizen fees/taxes and killing the golden goose (around 2/3rd way through video).

    - http://www.smats.net/news-insight/news-insight/ats-election-property-update-may-2019/


    As I’ve previously commented…..we wont be purchasing any more investment properties in Australia when we are going to get taxed between 38-45% tax compared to LTCG on USA equities of 15% and that's where we are sending our money each month and have built up a nice little portfolio of various stocks.

    When we do need to sell......will be happy paying 15% on capital gains even though we miss out on the leverage of a mortgage due to no desire to leverage stocks though could if we wanted to.

    This said if Australia wants to lower its housing costs we need more #Tier2Cities and we need them now.

    Until its just as cool to live in Nowra, Orange, Port Macquarie as it is Sydney, housing=expensive.
     
  2. Simon Hampel

    Simon Hampel Founder Staff Member

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    Agree completely - we've always been far too focused on our large cities.

    We need government investment and maybe even tax breaks for businesses for the large regional centres to become viable alternatives to living in the city.
     
  3. Kangabanga

    Kangabanga Well-Known Member

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    Its already a mess infrastructure wise in big cities so that not going to happen. Water supply major issue too.
     
    Last edited: 31st May, 2019
  4. FredBear

    FredBear Well-Known Member

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    Thanks for the link, Dean. I agree 100% that State & Federal taxes have gone crazy for expats. CGT effectively 45%, NSW Land Tax at more than 50% of rental income, plus all the other recent changes that affect all property investors (depreciation, travel for example)

    Interested in your approach to investing in US equities: if you are planning to come back to Australia at some point, then Australian equities have the advantage of no CGT while you are non-resident, as the cost base resets to the value on the day you return, vs. 15% LTCG on US equities. Also I'd be wary of US estate tax, that can bite bad if/when you are a non-resident of the US.
     
  5. Dean Collins

    Dean Collins Well-Known Member

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    Im not sure tax incentives are the way to do it....this said maybe its whats required.

    However I did want to comment that a few of my tech friends in Sydney relocated to Adelaide just before the last property downturn, haven't heard anything recently about more people moving, but feel that once property prices move back up again we could see it rise up in the conversations again eg the same way that "overnight" (really 6-8 years) Austin Texas became a mecca for tech folks leaving SF and NY for cheaper digs and now has the allure for tech talent that means its a very viable option (Bould Colorado is another tech mecca....but that's more for tech startups and I've explained how the VC community made that one happen before).
     
  6. Dean Collins

    Dean Collins Well-Known Member

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    We intend to go all cash before moving back to Australia for retirement due to something called The Heart Taxation Act (long story if you google you'll find some of my posts) This is another reason why we stopped buying Australian property (eg cant hold and pro-rata as part expat/part resident in Australia as have a defined sale event 'though date unknown' when we do decide to retire).

    If we die here......limits are very reasonable.
     
  7. Omnidragon

    Omnidragon Well-Known Member

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    Here’s a a nice comparable.

    I sold an inner city Melbourne terrace for $900k in 2015. Same property passed in on a vendor bid of $900k yesterday lol
     
  8. Dean Collins

    Dean Collins Well-Known Member

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    Sure....but if you were cashflow neutral and you kept the property since 21015 on a NPV basis it would have made more sense NOT to sell the property because you are less "1" asset and if you did want to buy again you have lost the sunk costs of Stamp Duty and the sunk costs of selling the property (5%?) so today you are actually negative $45k and don't have a property.

    #JustSaying
     
    Last edited: 2nd Jun, 2019
  9. Omnidragon

    Omnidragon Well-Known Member

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    Hmm? Not really. Because I had better use for my money. In fact in 2016 I put all that cash into a stock that went up around 8x. Can even tell you what it is, 8.5c KDR placement with 1 for 2 15c call options. Stocks now $1.90 with a takeover from Wesfarmers. I sold too early otherwise would’ve done a 40x.

    Anyway, then I cashed out of the stock and bought an offshore property which is up 40% at 30% gearing... Now I’m refi-ing, taking some of the money there, combining it with other people’s money to snap up acres of land in the UGB, in vicinity of $50-100m. Don’t ask me structuring and no we don’t have $100m, we’re just punters. All started with a simple decision to sell a crappy $900k terrace earlier, amongst other things I sold.

    What am I going to do with a few hundred k equity in some random cashflow neutral property not growing for 4 years? When am I going to make another $200k, not to mention $5m or $10m? It’s what Dazz always says when he used to come, and I can understand why he’s stopped. Albatrosses. If you’re not making 10% IRR pa net of all costs on your money that’s just failing investing 101 I think
     
    Last edited: 9th Jun, 2019
  10. Dean Collins

    Dean Collins Well-Known Member

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    8x in stocks..... then dated Karen ....you wouldnt know her ...she's from Canada.

    :)
     
  11. Omnidragon

    Omnidragon Well-Known Member

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    Lol you remind me why some of the more experienced guys stopped coming here and sharing. Stick to flat growth properties, fantastic stuff. Suits your investment style, while I wait to see how my Victory Offices IPO does Friday. Probably easy 25% in a day
     
    Last edited: 10th Jun, 2019
    Oliver Shane likes this.
  12. Oliver Shane

    Oliver Shane Well-Known Member

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    Great thread :)