The taxes were paid in full, but reduced the amount of tax they pay on other income i.e. they are a tax deduction. The government only receive the tax on their income after these deductions, I don't think you would deny this. I've assumed an average tax rate of 30% for these PIs, reasonable no?
Yes. But if you want to count them on one side of the ledger (deductions received) then you have to count them on the other side of the ledger (taxes paid) since what you are comparing is taxes paid vs. deductions received.
But this is just another example of why any analysis of this kind of thing is terribly hard.
Why not add the 10% GST on all the services the LLs paid for to the total tax? Why not the income tax on the income earned by the tradies? Why not the 10% GST they paid on the things the bought with the money they had left over after the tax?
Fact is, if you follow the money far enough you go round the circle a couple of times, tax is more than 100%, and you disappear up your own arse.
It's futile and pointless.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
Nothing new at all, and I don't mind subsidising renters because it means I'm making more profit, so it's a win-win for everyone, landlords, renters and the government alike.
I only brought this up because right at the beginning of the discussion Piccolo claimed taxpayers (by which he meant renters) were subsiding property investors.
I simply pointed out that it is the other way around. Highly taxed homeowners, including investors, subsidise essential services for low taxed renters, as a result of the $40 billion net tax revenue we generate for the government every year.
So, even though me and others have ripped this absurd statement to shreds you continue to spout it.
I think its time you took a break from posting here.
You're embarrassing yourself.
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
All the costs of making a property available to the renter ( including paying for their waste collection etc ) is built into the rent as part of the market price ...
If you cant even figure out that every accrued cost in running your venture is a not a “subsidy” but part of what they are paying rent for then you need to pull your head out of the sand…. Its not the renter’s problem if you feel you have too many costs – you offered the service with the accepted market conditions ( assumingly understanding the costs ) and they accepted it ... that’s simply business..
to act like PI's are providing a charity reducing renter's tax burden or whatever is - absurd ......
edit: landlord's claiming tax concession for not being able to cover their costs IS a subsidy. Not an unreasonable one IMO, though i do agree it should be directed to more productive investment in property ( like construction of new residences rather than supporting the values of existing ones ) ...
This is not correct - the market sets the price ie supply of property versus number of renters. You cannot just up the rent because your costs increase.
If property investment is removed from the negative gearers (74% of whom earn less than $80K and only 4% of whom are in the top tax bracket), it will become a rich mans game and property rentals will be run more like a business I can see then this changing. Big corporations owning lots of rentals will be able to pass on costs to the renters.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
If your rental income from renters ( your source of income ) couldn't cover these costs - then the business model fails and you need to ask for more rent ... OR you have facility to ask for concessions / subsidies from the taxpayer through NG..
OR you can lobby for less tenant-friendly laws. etc etc etc. What most people, LL or not, don't really get is that if LLs were to get these concessions, the business model would get better and rents will go down as a result because the market is pretty efficient at eliminating excess returns on either side through price mechanisms. When something changes, one side will take it in the shorts for a little while, but it *will* even out.
Yes. But if you want to count them on one side of the ledger (deductions received) then you have to count them on the other side of the ledger (taxes paid) since what you are comparing is taxes paid vs. deductions received.
But this is just another example of why any analysis of this kind of thing is terribly hard.
Why not add the 10% GST on all the services the LLs paid for to the total tax? Why not the income tax on the income earned by the tradies? Why not the 10% GST they paid on the things the bought with the money they had left over after the tax?
Fact is, if you follow the money far enough you go round the circle a couple of times, tax is more than 100%, and you disappear up your own arse.
It's futile and pointless.
I'll agree the deeper you delve into the tax system the more complex you find it really is.
Agreed even with the most complex analysis you could only ever get into a ballpark on something like this. Really the reason I jumped on this thread was to show that the amount Shadow was throwing around of $40B paid by the housing sector in no way represents the net tax paid by PIs which contribute to the economy outside of their property. I think I've shown that fairly clearly. The amount I've come to so far is approx. $5B net + CGT + some amount of GST on new builds less rental assistance going to renters renting their property. I agree we could take it much much further but lets not, I don't want to disappear up my own arse.
You're just mad because you don't like me subsidising you.
propertymogul
21 Aug 2014, 06:27 PM
the reason I jumped on this thread was to show that the amount Shadow was throwing around of $40B paid by the housing sector in no way represents the net tax paid by PIs
Never said it did. $40 billion is the total from the whole housing sector as I stated at the very beginning.
The amount from property investors is about $20 billion.
$4.7b in rates plus $4.3b in stamp duty plus $6b land tax, plus CGT, plus tax on rental income, plus GST.
And $4b deferred until later as a result of negative gearing.
This is not correct - the market sets the price ie supply of property versus number of renters. You cannot just up the rent because your costs increase.
If property investment is removed from the negative gearers (74% of whom earn less than $80K and only 4% of whom are in the top tax bracket), it will become a rich mans game and property rentals will be run more like a business I can see then this changing. Big corporations owning lots of rentals will be able to pass on costs to the renters.
as miw states... it will self - balance... supply / demand etc.... people wont invest in something knowing it will make them lose money, and people wont pay for if they cant afford it...
no, you cant personally up your rates as you are in competition, so need to understand your financial plan and how market rates affect your business plan and how you will make your money ... its pretty simple stuff..
id love to charge twice as much for my services to have more buffer between costs and earnings but i'd be undercut by all my competition... so instead have to make sure know all costs -inclusive of taxes, staff cost rates etc - and how much wiggle room there is before need to pull the plug on a deal if the profit margin is simply too low. exactly the same principle in offering a rental property .. the costs servicing the renters needs arent subsidies, they are simply costs.
honestly - all this thread is showing me is how much dumb money is in Aussie property ( at least in the subset represented on this forum )
You're just mad because you don't like me subsidising you.
But you're not.
All you are doing is embarrassing yourself by talking nonsense.
Are you compensating for some deep insecurity by imagining yourself as some sort of Randian superman?
Trouble in the bedroom perhaps?
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
You're just mad because you don't like me subsidising you. Never said it did. $40 billion is the total from the whole housing sector as I stated at the very beginning.
The amount from property investors is about $20 billion.
$4.7b in rates plus $4.3b in stamp duty plus $6b land tax, plus CGT, plus tax on rental income, plus GST.
And $4b deferred until later as a result of negative gearing.
So approximately $5B net tax paid going into the broader economy on assets worth trillions as shown above. + CGT + some GST less rental assistance to renters renting their property.
I've already shown above why the $4B is not a deferral. The fact that it is happening every year means that on average when PIs sell there is a loss that has been partially funded by the taxpayer that will never be recovered. It also means that on average PIs never become positively geared prior to selling.
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