stamp duty, land tax, tax on rental income, GST on new dwellings, rates, development fees etc
you want to create the entirely misleading impression that those who are in the business or building, selling and renting houses contribute 40% of the tax take
Incorrect. The only ones I listed that are unique to investors would be land tax and tax on rental income. The rest are paid by owner occupiers as well as investors.
Quote:
the claim that property investors contribute more than they take in taxes
They don't take anything. Nobody can take tax apart from the government. Everyone else contributes tax.
Incorrect. The only ones I listed that are unique to investors would be land tax and tax on rental income. The rest are paid by owner occupiers as well as investors.
They don't take anything. Nobody can take tax apart from the government. Everyone else contributes tax.
Why are you lying?
You posed a chart regarding property taxes and the tax take from the ATO or the ABS, cant remember which.
Then you assert that this is the tax contribution of the "housing sector"
Can you define the housing sector?
Who is in, who is out?
Why should we view this "housing sector" as being the same as" property related taxes" in terms of its contribution to the tax take.
If you don't answer this question, I will take it as read that you are admitting that you are just spinning.
This is what you are basing your 40% claim on. Note the words "housing sector" appear nowhere on this chart.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
he is making a very definitive claim: the housing sector contributes 40% of the tax take
No I didn't. You are getting confused. I said $40 billion, not 40%.
Quote:
Do you think that owner occupiers are part of the housing sector
They buy houses, pay stamp duty, pay ongoing rates, pay development fees when they renovate. Of course people who own houses are part of the housing sector.
They buy houses, pay stamp duty, pay ongoing rates, pay development fees when they renovate. Of course people who own houses are part of the housing sector.
Thanks finally for an answer.
We can take it as read then that people who own cars are members of the car sector.
As are people who buy food and clothes ( they pay GST on that don't you know!)
In short, anyone who buys anything which includes a Government tax as part of the transaction is part of that sector.
Who knew that when I bought my lunch earlier I became part of the sandwiches and coffee sector?
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
That may be your own personal opinion, but it's not my view, nor is it the view of the government / ATO, nor the majority of voters. Buying and maintaining property to rent is just as legitimate an endeavour as buying shares or mowing lawns or any other endeavour that an individual might conduct with the aim of bringing in some extra income.
I didn't realise you could read the minds of the government/ATO, as well as all voters in Australia, amazing. I don't pretend to know what the majority of voters and the government and ATO are thinking, but I do know that lots of people agree with this view. And people with a vested interest in negative gearing property should not be counted, as they can't be independent. The difference in cashflow could break them.
The housing sector is the second highest taxed sector of the economy, contributing over $40 billion NET revenue for the government every year via stamp duty, land tax, tax on rental income, GST on new dwellings, rates, development fees etc. The truth is highly taxed property owners are subsidising essential services for low taxed renters.
Australian property is worth around $5 trillion. Construction of new dwellings is too highly taxed I agree, but that is not what we are discussing. So $40 billion net revenue (assuming your figures are accurate) is only 0.8% of the value of property assets in Australia, a pitiful amount of net tax for such a huge asset base. And that includes tax on new builds, which is probably the bulk of that figure. Looks like property investors contribute bugger all to the tax base then, as most of the 0.8% property asset value going into tax revenue comes from construction of new builds. Instead they are leaching off taxpayers.
The tax deferred (not forgone but just deferred) via negative gearing is a drop in the ocean, and if those losses were not claimed against personal income today then they would simply be claimed against future IP income tomorrow. The net result is zero - the government doesn't lose any money over the long term by allowing expenses to be claimed immediately rather than carrying them forward.
Refer above - billions of dollars is not a drop in the ocean to taxpayers carrying the burden of supporting property investors. However you are right though that compared to the value of property, the tax contributed by that sector is pitiful. Regarding the timing, we all know that it is better to have a dollar this year rather than next. Particularly important when dealing with taxpayer funds which incur interest when the government is in debt.
So the 'taxpayers' (by which you really mean 'renters') are not subsidising anything. The 'taxpayers' are actually subsidised by the $40 billion net government revenue contributed by the housing sector every year. So remember that next time you drive on a road or use a hospital or take your kids to school. Taxes taken from homeowners enable you to do all that. We're sudsidising you. But you don't hear us whinging about the unfairness of it all.
No by 'taxpayers' I mean 'taxpayers'. The 0.8% of property value that makes it into tax revenue each year is mostly made up of taxes on construction of new builds and rates. Rates go to local councils that collect rubbish and maintain roads (i.e. it doesn't go into state or federal coffers), so the homeowner (including property investors) receive direct bang for their buck for these dollars. Property investors on existing builds (their preferred investment) are contributing bugger all particularly when you put it in percentage terms, meaning that (non property investor) homeowners, construction companies and builders are paying the bulk of those taxes. After deductions property investors are contributing bugger all to tax revenue off a huge asset base that is a basic human need.
For a huge asset base
Bump - Shadow the numbers you presented show that property investors contribute bugger all net tax on a huge asset base. Rates directly benefit the property paying it. Taxes on new builds is mostly paid by owner occupiers. GST from new builds is also mostly paid by owner occupiers. In addition the negative gearing claims by property investors need to be offset against the pitiful amount paid by property investors.
The answer was in my first post where I listed the components that make up the $40 billion.
In your magical housing sector whereby your definition in sector means that anyone who buys any good or service with Government tax attached become part of that sector.
I'm buying a new suit at the weekend. Looking forward to becoming part of the suit sector.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
These are requirements that must be met. Exceptions to the requirements are only allowed at the discretion of the ATO. They are not guidelines. Read it again. Exceptions allowed include artists and primary producers (listed on ATO website). Any exceptions not listed can only be approved at the discretion of the ATO. Examples of exceptions to the rules which the ATO say they will consider are bushfires and oil spills.
"Income requirement and business tests
To be able to offset a business loss against other income, you and your business need to meet a number of requirements.
Income requirement
Your income for non-commercial loss purposes must be less than $250,000. It includes your: taxable income (ignoring any business losses) total reportable fringe benefits amount reportable superannuation contributions total net investment loss.
If you pass the income requirement, you must also meet one of the business activity tests, unless you are covered by an exception to the rules or we exercise our discretion to allow you to offset your loss against other income.
Further Information The income requirement was introduced in the 2009-10 year. For more information, refer to Non-commercial losses - income requirement. End of further information Business tests
If you meet the income requirement, you can offset a loss from a business against your income from other sources if the business passes one of these tests: The assessable income test - the business has assessable income of at least $20,000. The profits test - the business had a profit for tax purposes in three out of the past five years (including the current year). The real property test - the value of real property, or of an interest in real property, that you used in the business on a continuing basis was at least $500,000. The other assets test - the value of assets (excluding real property, cars, motor cycles and similar vehicles) you used on a continuing basis in carrying on the business was at least $100,000."
Bump.
Still no denying that property investors are not subject to the same tests as business owners. By my estimates, approximately 35-50% of property investors would be denied the negative gearing tax breaks if they were subject to the same tests as businesses in claiming losses. Stinkbug recently said that 70% of property investors only have one property. Most of the one property investors are likely to be in the below $500k category.
I have asked repeatedly for a definition of the housing sector (it is not one used by the ATO or the ABS)
Are we including the taxes paid by OOs?
If I own a car, am I part of the car sector?
What do you think?
I think that if you are going to look at issues around negative gearing and housing, you should consider *all* taxes raised though all housing in general ,yes, including amounts paid by OOs.
So if I understand you, you would like to know what proportion of that $40B figure is paid by property investors on property available for rent vs by OOs? Hard to say for sure I would think, but as a starting point take at least 1/3 of rates, and 1/3 stamp duties (maybe more if PIs turnover more often?), then add in 100% of land taxes, and 100% of tax paid on rental income, as these are only levied on PIs, and then some proportion of the other taxes (like GST on new builds etc). A back of the envelope number here would be around 50%-ish or $20B+ I reckon. Want to have a stab at it?
In your magical housing sector whereby your definition in sector means that anyone who buys any good or service with Government tax attached become part of that sector.
I'm buying a new suit at the weekend. Looking forward to becoming part of the suit sector.
Any taxes you incur on buying your suit would contribute to the 'provision of goods and services' sector (however homeowners do obviously contribute to that sector as well).
Basically all working adults contribute to rows 1,2,4 and 5, but only those of us involved with property contribute to row 3...
You don't contribute any housing sector taxes, but I do.
So I subsidise you, but there's no need to thank me. If you want to hurl some more abuse instead of thanking me, that's fine.
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