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This says it all; Nothing is more sacred than property
Topic Started: 25 Oct 2016, 04:01 PM (3,515 Views)
herbie
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Chris
25 Oct 2016, 04:01 PM
... it is sheer madness.
Wot's sheer madness is ta be heavily neg geared during a protracted period of flat or falling prices - Unless one has very deep pockets AND considerable faith in a future turnaround eventually - Which a cousin of mine who was neg geared on a Sydvegas shitbox found out ta his detriment many years back.

So does NG drive speculation? Or do rising housing prices drive NG - Ta get inta tha game?

Wif falling/flat housing prices definitely NOT driving tha desire ta be neg geared - Leastways NOT in me cuz's case anyway ... :)
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Jon Snow
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herbie
25 Oct 2016, 11:20 PM
Wot's sheer madness is ta be heavily neg geared during a protracted period of flat or falling prices - Unless one has very deep pockets AND considerable faith in a future turnaround eventually - Which a cousin of mine who was neg geared on a Sydvegas shitbox found out ta his detriment many years back.

So does NG drive speculation? Or do rising housing prices drive NG - Ta get inta tha game?

Wif falling/flat housing prices definitely NOT driving tha desire ta be neg geared - Leastways NOT in me cuz's case anyway ... :)

From Oxford to Ocker in two posts .... I sense a pattern.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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Foxy
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Zero is coming...

Rufus
25 Oct 2016, 08:46 PM
I'll try to explain it.

If I you had a property that earns $25K per annum, but interest, costs, plus depreciation total $26K pa then that property is negatively geared by $1000 pa.

So you lodge your tax return declaring wages of $80K which is then reduced to $79K pa with the $1000 tax loss.

IF we get rid of NG.

You still lodge your tax return for $80K but it doesn't get reduced by $1000. Instead that $1000 tax reduction gets carried forward until rents increase.

Say in 7 years the rents have now increased to $29K pa and the costs are still $26K pa then that $3000 profit is written off against the losses carried forward.

Effectively getting rid of NG just changes the timing of the tax deduction benefit. It would favour the wealthy who don't have cash flow issues, but not much else would change. A higher % of IP's would be held by wealthy investors rather than mum and dad investors, but otherwise no changes.
WHAT CAN YOU DO WITH $3,000 P.A.?
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Jon Snow
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foxbat
25 Oct 2016, 11:26 PM
WHAT CAN YOU DO WITH $3,000 P.A.?
In Sydney, you could save that $3000 for 80 years and buy another investment property!

:tu:
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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herbie
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foxbat
25 Oct 2016, 11:26 PM
WHAT CAN YOU DO WITH $3,000 P.A.?
Buy 31 of these. ('N still have a grand total of $55.31 left over pa ta squander on totally unnecessary trifles.) :

https://www.danmurphys.com.au/product/DM_749095/amrut-fusion-indian-whisky-700ml?orgSearchTerm=amrut%20fusion

Mother's Milk! - I thoroughly recommend it ... :)
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Rufus
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Jon Snow
25 Oct 2016, 10:41 PM

Except that ... a corporation cannot run one business at a loss to offset revenue from a second business, but an individual can.

A business has to be run as a going concern, but personal income apparently does not.

The point of NG, therefore, is to defray the holding cost of investment property while you wait for a capital gain.

In other words, it drives price speculation.
Not really.

I work for my own company. I could buy property in my company's name. If they ran at a loss that would reduce the company profits and reduce my income drawn as wages or dividends.

I feel pretty comfortable I could work it to my advantage. Especially as they are positively geared and I would be paying tax at the company rate rather than a higher individual rate. Understand that I do need to draw that money eventually, but it can sit there and be drawn at a time when income was lower, such as in retirement, and it can be paid into my Super at a low rate of tax, because as my own employer I can do that.

If you change the rules you will change the way people approach the game, and you will probably attract a different type of player, but it won't stop investors claiming every dollar of their tax deductions.

Essentially owning investment property is a business, and it should be run as such.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Terry
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Rufus
25 Oct 2016, 11:55 PM


Essentially owning investment property is a business, and it should be run as such.
What an ironic thing to claim.
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Rufus
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Terry
26 Oct 2016, 12:17 AM
What an ironic thing to claim.
Not at all, it is a business and should be run professionally, which mum and dad investors tend to not do.
If the amateur small investors were replaced by professionals, rents would be higher.

Be careful what you wish for.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Matthew
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Jon Snow
25 Oct 2016, 10:41 PM

Except that ... a corporation cannot run one business at a loss to offset revenue from a second business
Are you sure of that, or is that something you simply think to be true?

My only hope for my three boys is that they turn out nothing at all like Chris.
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Terry
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Rufus
26 Oct 2016, 12:23 AM
Not at all, it is a business and should be run professionally, which mum and dad investors tend to not do.
If the amateur small investors were replaced by professionals, rents would be higher.

Be careful what you wish for.
What a load of horse-shit. Essentially, renting residential property "was" a business, but it's current incarnation is an "investment", which the legal, financial, and economic infrastructure is constructed to support. If it weren't an "investment" promising easy money, it possibly would be a business.
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