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Good News: Treasury pushing remodel of Negative Gearing for only new homes!; Corrupt and vested real estate interest run for cover!
Topic Started: 14 Aug 2014, 09:26 PM (33,899 Views)
herbie
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Jimbo
17 Aug 2014, 04:39 PM
... You may be a working class Labour voter who bought an investment property and benefited or you may be a working class Labour voter who feels they have been priced out by NG ...

... My belief is that NG will be tinkered with in the same way as FTB or fuel duty ...
Whatever they might or might not do, I simply don't believe any of it would be retrospective - Namely it won't affect the neg gearing arrangements existing owners have in place.

That said, does anyone recall if when Keating attempted to change things back in the 1980s, were the changes retrospective?
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Jimbo
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herbie
17 Aug 2014, 05:02 PM
Whatever they might or might not do, I simply don't believe any of it would be retrospective - Namely it won't affect the neg gearing arrangements existing owners have in place.

That said, does anyone recall if when Keating attempted to change things back in the 1980s, were the changes retrospective?
It's a tax concession. If they reduce FTB, they don't just apply it to people who haven't had kids yet.

If NG is reduced, it will apply to everybody.

Relax though. It won't come out of the blue.

No party would abolish FTB overnight and no party would abolish NG overnight. That is just plain common sense.

Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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herbie
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Mustapha Mond
17 Aug 2014, 01:44 AM
... What part of "houses don't make money" don't you get? ...
One of the silliest arguments the bulls have ever come out with is that neg gearing was meant to add to supply.

To the extent that it's 'meant' to do anything (as opposed to simply being an application of a basic principle that if you make a loss, you can claim it as a loss), it seems to me that it's meant to move the job of supplying rental accommodation away from the public purse towards the private one?
Jimbo
17 Aug 2014, 05:07 PM
... Relax though ...
The property I own is all debt free - So I'm not personally worried at all if it is removed.
And for my own selfish reasons, I'd actually not be sorry to see it removed - Providing doing so doesn't trash the economy.

Though I still reckon removing it would be 'wrong' - From the POV of basic tax principles.
Edited by herbie, 17 Aug 2014, 05:23 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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miw
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Jimbo
17 Aug 2014, 05:07 PM
It's a tax concession.
It's not a tax concession. It is just application of two general principles of Australian tax law.

1. All income whether from salaries or from main business or from side business or whatever gets pooled into a single figure for the purposes of appraising income tax.

2. Where you have legitimate expenses in earning your salary (except for specific exceptions like travel between place of work and home and the clothes you wear to work) or running your business (like interest, consumables, repairs, running a vehicle) they are deductible against the whole pool in the year they were expended.

The only way in which own-to-rent is in any way different from any other business you might run on the side is that the parameters are very well-defined and no correspondence will be entered into. If you have a sideline doing embroidery and selling embroidery supplies, you might have to justify why you call it a business and not a hobby.

Making any change to NG would amount to making a special case for one particular kind of business. In the past whenever this has been done, it has not ended well or had the intended effect.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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herbie
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miw
17 Aug 2014, 05:29 PM
It's not a tax concession. It is just application of two general principles of Australian tax law.

1. All income whether from salaries or from main business or from side business or whatever gets pooled into a single figure for the purposes of appraising income tax.

2. Where you have legitimate expenses in earning your salary (except for specific exceptions like travel between place of work and home and the clothes you wear to work) or running your business (like interest, consumables, repairs, running a vehicle) they are deductible against the whole pool in the year they were expended.

The only way in which own-to-rent is in any way different from any other business you might run on the side is that the parameters are very well-defined and no correspondence will be entered into. If you have a sideline doing embroidery and selling embroidery supplies, you might have to justify why you call it a business and not a hobby.

Making any change to NG would amount to making a special case for one particular kind of business. In the past whenever this has been done, it has not ended well or had the intended effect.
To me it all raises the broader general issue of just how desirable it is to have pollies micro-managing the tax system in an attempt to achieve particular social goals.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Jimbo
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herbie
17 Aug 2014, 05:12 PM
One of the silliest arguments the bulls have ever come out with is that neg gearing was meant to add to supply.

To the extent that it's 'meant' to do anything (as opposed to simply being an application of a basic principle that if you make a loss, you can claim it as a loss), it seems to me that it's meant to move the job of supplying rental accommodation away from the public purse towards the private one?

The property I own is all debt free - So I'm not personally worried at all if it is removed.
And for my own selfish reasons, I'd actually not be sorry to see it removed - Providing doing so doesn't trash the economy.

Though I still reckon removing it would be 'wrong' - From the POV of basic tax principles.
From a purely business perspective, NG makes perfect sense. You get taxed on your profit only and not on your turnover.

However, NG has attracted a lot of dumb money into the market and with dumb money comes irrational buying which adds more fuel to the fire.

That is what I see in Perth property. People chasing low priced property to add to their portfolios and in doing so forcing out the first time buyers who will eventually become their tenants because they can't afford to buy.

It works well until it becomes cheaper to buy a new build than to pay your landlords mortgage for them.

That is where we are in Perth right now.


Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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peter fraser
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herbie
17 Aug 2014, 05:02 PM
That said, does anyone recall if when Keating attempted to change things back in the 1980s, were the changes retrospective?
As I recall the existing NG arrangements were left in place but those who bought investments after a nominated date couldn't offset losses against their personal income. The prior arrangements were grandfathered.

It's considered very bad policy to legislate retrospectively for taxation unless it's to close a loophole the enabled people to act in a way that was contrary to the spirit of the tax legislation.

Edited by peter fraser, 17 Aug 2014, 07:47 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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miw
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Jimbo
17 Aug 2014, 06:02 PM
It works well until it becomes cheaper to buy a new build than to pay your landlords mortgage for them.

That is where we are in Perth right now.

A few posts ago you were railing against dumb money people who were crowding FHBs out of the market. Now you are saying that FHBs could buy an equivalent new dwelling to what they live in now simply by using the rent they are paying now.

Either they are crowded out or they are not crowded out. Make up your mind.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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There is nothing wrong with the principles of ng..
If you make a loss, I agree that you should be able to claim it.
However for it to be fair and just to ALL Australian tax payers (including young Australians not yet paying tax),
Come tax time capital gains need to be taxed annually, the same way losses can be claimed annually..
Because for the unlucky Australians who weren't born pre boom times, in sydney for example with 17%yoy gains,
Now have to not only pay the extra 120k or whatever it works out for the average home.. But they have to pay interest and tax on top of that, so over the life of a mortgage are a good 250+k worse off..
The difference between fhb's and investors, is that fhb's will have to earn the money to pay off their first house. Whilst most investors are relying on younger generations taking on more debt so they can make a profit..
Young people are waking up to it all, the easy profits can't last forever
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Timo
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Mustapha Mond
17 Aug 2014, 01:44 AM
Hi Timo,
What part of "houses don't make money" don't you get?
How can the dole bludger ever get to build a House?
And why would the rich ever build them One???
Enter N.G..
Tax effective way the wealthy can be encouraged to risk their capital to build houses for the bludgers.
If you stop the rich getting a tax break the government will have to build more bridges, because that is where the bludgers will have to move to.
Please work this out Timo before you hurt the very people you are trying to help.
Cigarettes, sodas and hamburgers are the investments of renters, they Can't get all that good stuff if they waist their money on buying houses.
Peter
And what would the real rent have to be if there was no N.G.???
Peter

Are you related to Joe Hockey? Your ignorance is pretty astounding.

NG is not required for healthy property investment, and exist in many countries without NG as proof of that.

Leave markets well alone, let them function naturally, and house the homeless and poor with tax dollars, not line the pockets of class welfare recipients.

After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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