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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 (33,880 Views)
propertymogul
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Shadow
21 Aug 2014, 04:11 PM
What losses? The fact that we pay so much tax means we are not making losses.

2012 figures...

Land tax = $6 billion
Rates = $14 billion
Stamp duty = $13 billion

A third of the housing stock is owned by investors, so that's $4.7b in rates plus $4.3b in stamp duty. Land tax ($6b) is all paid by investors.

That's $15 billion so far. Plus 100% of capital gains tax and 100% of tax on rental income. Plus GST.

Then add another 10% due to the rise in house prices since 2012.

It would be at least $20 billion paid by property investors.
Lets for arguments sake take your $15B. You would then have to deduct the $4B benefit they receive from negative gearing. Brings it to $11B. They receive a direct service for their rates which increases the rent they can charge so deduct $4.7B for rates gives $6.3B. Also need to factor in the tax deduction they are receiving on the $10.7B as they are only paying the net amount. Lets give you some upside and say $5B net. Add CGT (which is paid at a discounted rate compared to PAYG workers shouldering your losses). On assets worth trillions :D A miniscule percentage.
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stinkbug
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Some data to add to the debate...

Total taxation revenue collected by government: http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5506.0Main%20Features22012-13?opendocument&tabname=Summary&prodno=5506.0&issue=2012-13&num=&view=

Taxation on property: http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5506.0Main%20Features32012-13?opendocument&tabname=Summary&prodno=5506.0&issue=2012-13&num=&view=

Total taxation 2012/13 was $415 122 000 000 (ie about 415 billion)

Total taxation on property was 8% of this, so approx $33.2 billion. This figure does not include GST.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Shadow
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propertymogul
21 Aug 2014, 04:28 PM
Lets for arguments sake take your $15B. You would then have to deduct the $4B benefit they receive from negative gearing.
They don't receive any money from negative gearing. Remember, only the government receives tax. Everyone else pays tax.

Negative gearing simply defers a tax payment of $4B until later. It still gets paid, but later.

Anyway it would be less than $4B now due to the fall in interest rates.

Also, the $15B doesn't include Capital Gains Tax or tax on rental income or GST.

It also needs to be adjusted upwards due to house price inflation since 2012.

So the bottom line is property investors pay about $20 billion in taxes, but get to defer less than $4 billion until later.
Edited by Shadow, 21 Aug 2014, 04:43 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Chris
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stinkbug
21 Aug 2014, 04:29 PM
Some data to add to the debate...

Total taxation revenue collected by government: http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5506.0Main%20Features22012-13?opendocument&tabname=Summary&prodno=5506.0&issue=2012-13&num=&view=

Taxation on property: http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5506.0Main%20Features32012-13?opendocument&tabname=Summary&prodno=5506.0&issue=2012-13&num=&view=

Total taxation 2012/13 was $415 122 000 000 (ie about 415 billion)

Total taxation on property was 8% of this, so approx $33.2 billion. This figure does not include GST.
What the debate is missing is clarity Stinkbug.

What everyone is claiming is that if it wasn't for investors purchasing these properties then this revenue would not be realised. The properties would not be owned, sold, exist for that fact and no revenue would be derived from them without investors owning them.

This is completely and utterly wrong, the revenue will exist by in large with or without investors. You don't think that if
NG is removed home values won't die in the arse?? Of course they will and then the cycle or transition begins. Rents rise, renters can't afford it so they make alternative arrangements, move back home, move in with friends, whatever. No rent means most investors need to sell, this sends prices in a downward spiral. The market finds its real value and those renters are now buying homes and paying all duties owed including stamps, rates etc.

The revenue will still be realised and it maybe lower in nominal value because prices have dropped but so would the exposure to the costs associated with NG property so as a nation we would be light years in front.

Don't twist the truth, NG does not create any income that wouldn't exist already.

Or are you going to state categorically that NG IP create revenue that the nation would otherwise never see?
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Shadow
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Chris
21 Aug 2014, 04:47 PM
What the debate is missing is clarity Stinkbug.

What everyone is claiming is that if it wasn't for investors purchasing these properties then this revenue would not be realised. The properties would not be owned, sold, exist for that fact and no revenue would be derived from them without investors owning them.
I haven't seen anyone claiming that, never mind 'everyone'. But thanks for bringing some 'clarity'. :re:

Quote:
 
This is completely and utterly wrong, the revenue will exist by in large with or without investors
The revenue will still be realised and it maybe lower
You're saying revenue will still exist but there will be less of it? So some of it won't exist any more? Again, thanks for your 'clarity'. The debate was missing it.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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propertymogul
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Shadow
21 Aug 2014, 04:42 PM
They don't receive any money from negative gearing. Remember, only the government receives tax. Everyone else pays tax.

Negative gearing simply defers a tax payment of $4B until later. It still gets paid, but later.

Anyway it would be less than $4B now due to the fall in interest rates.

Also, the $15B doesn't include Capital Gains Tax or tax on rental income or GST.

It also needs to be adjusted upwards due to house price inflation since 2012.

So the bottom line is property investors pay about $20 billion in taxes, but get to defer less than $4 billion until later.
The $4B negative gearing loss needs to be offset to show how much is taken by the government by PI in a particular year. Do you disagree? Because all the numbers we are discussing are on a per year basis, are they not? The $4B includes all the profit making properties and shows that more properties are making a loss than a profit (or the ones that have deferred their tax). Many of these properties will be sold before they start turning a rental profit, and some will be sold at a loss. That is actually worse than I thought, and likely means that it takes longer than most on here think to finally turn a rental profit on investment properties.

The data that stinkbug just posted seems to indicate that the total property take has dropped to $33B, not gone up as you think? So the $5B paid by PI may need to be adjusted down.

Also, the $15B doesn't include Capital Gains Tax or tax on rental income or GST.


Overall PIs are making losses so are asking taxpayers to contribute to their rental income to help make up the shortfall. Agreed the $5B (not $15B as you haven't deducted rates or negative gearing benefits) needs to have CGT added. PIs get a discounted rate on CGT compared to PAYG taxpayers. GST from property would be limited to new builds, which is mostly paid for by OO.
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stinkbug
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Chris
21 Aug 2014, 04:47 PM
You don't think that if NG is removed home values won't die in the arse??
I doubt it. There'll be a dip while some amateurs sell out, but I wouldn't have thought it would be a cause for material change. Property investment would become a more professional business, though.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Chris
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stinkbug
21 Aug 2014, 02:52 PM
Could it be that the average deduction figure per investor does not include rent claimed as income? There's no way known the net concession is 36B, it's more like 3.

I remember posting data here once showing that CGT paid by individual resi investors was something like 4 times the total NG concession each year.
CGT, i am lead to believe this can be minimised and even reduced through things like SMSF, trusts etc but lets say that CGT is a large contributor to revenue and that all investors are paying their share, highly unlikely but lets entertain the idea.

What you are saying is that if NG didn't exist then then CGT on these properties would never be realised. This is wrong, investor would still pay (dumb investors anyway) full CGT once they sell the asset for a capital gain.

And the net concession value of $3b needs to be explained, what you know the tax withheld to be, the total deductions per year and for your arguments sake the about of CGT paid in that 2011-12 period.
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vdmruss
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stinkbug
21 Aug 2014, 04:55 PM
I doubt it. There'll be a dip while some amateurs sell out, but I wouldn't have thought it would be a cause for material change. Property investment would become a more professional business, though.
This is the way it should be.
Let me assure you that this isn't one of those shady pyramid schemes that you've been hearing about. No sir, our model is the Trapezoid which guarantees each investor an 800% return within hours.
Those who can, do. Those who can't, teach.
"It's an itchy blanket, it's designed to remind you how lucky you are"
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Shadow
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propertymogul
21 Aug 2014, 04:54 PM
The $4B negative gearing loss needs to be offset to show how much is taken by the government by PI in a particular year. Do you disagree?
Only if you then add back in an equivalent amount of additional income tax that is incurred in that particular year as a result of tax deferred previously. Remember the tax is not foregone, just deferred. The $4B not paid this year will be paid later. The $4B not paid in earlier years will be paid this year.

Quote:
 
The data that stinkbug just posted seems to indicate that the total property take has dropped to $33B, not gone up as you think? So the $5B paid by PI may need to be adjusted down.
Stinkbug's link is the same one Mike and I posted yesterday. It says $36 billion in 2012/2013, but that doesn't include Capital Gains Tax, tax on rental income, or GST...

http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5506.0Main%20Features22012-13

Quote:
 
Overall PIs are making losses so are asking taxpayers to contribute to their rental income to help make up the shortfall
The overall loss is AFTER the payment of over $20 billion in tax. So as a result of that overall loss, we get to defer payment of $4 billion until later.
Edited by Shadow, 21 Aug 2014, 05:10 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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