The number of individuals claiming a net rental loss has flat-lined over recent years

Discussion in 'Property Market Economics' started by Eric Wu, 27th Apr, 2017.

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  1. Eric Wu

    Eric Wu Well-Known Member Business Member

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  2. paulF

    paulF Well-Known Member

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    Makes sense with the lower rate environment but would most probably revert back in the next few years with rates on the rise.
     
  3. Zoolander

    Zoolander Well-Known Member

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    Initial years depreciation claims would increase the loss as newly built stock go online. Seen as high as 1st year $15k for a 1bed unit, cant imagine how high a newly built house would be.

    Plus what paul said about rates going up.
     
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  4. Perthguy

    Perthguy Well-Known Member

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    Each property in my portfolio will be cashflow positive by the end of this year. For me, I was negative from buying development sites and renovators. All of mine were negative at purchase being older style houses on large blocks. After converting one to a 4x2 it will be cashflow positive and building at the back of another will make it cashflow positive. There has been a lot of development lately so (combined with low interest rates) this could explain some of the drop in net rental losses.

    The other factor is cashing in an asset that has performed well (Sydney and Melbourne booms) and keeping surplus funds in an offset account waiting for opportunities. I did that after selling in Melbourne and the interest on that property was nearly zero.
     
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  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    This one puts the above chart into perspective. No better graph to demonstrate that statistics can be presented in a myriad of ways to confuse or even mislead. Yes it is reducing BUT it grew very rapidly after 1999

    Its also a bit misleading to use "net" losses as some taxpayers (many taxpayers) offset positive rental income with losses. And repeat that process. So the pool of investment property is growing exponentially to fill the problem.



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    Net rental losses are small part of a bigger issue :

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    Like not being of great benefit to construction jobs ?
    I may expect to see this line swing up in the 2015-2017 period as we have undergone a housing construction boom of sorts.

    And the CGT costs being subsidised within the budget (which is a shortfall) is worse and getting even worse by the year.

    Negative gearing and the capital gains discount have not achieved their aim to boost housing supply and encourage the building of more new houses. This year, they will cost the budget over $10 billion. That’s more than that the government spends on higher education or child care. For example, the capital gains tax discount subsidy is growing rapidly, with revenue foregone doubling from $4.2 billion in 2013-14 to $8.6b by 2018-19.

    The capital gains discount cost is growing, on average, at 8% per annum over the forward estimates. This rate of growth is greater than funding on research, universities, VET and schools.


    Source (ALP) : Positive plan to help housing affordability
     
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