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Capital Gains Tax and Negative Gearing; Myths
Topic Started: 9 Feb 2011, 04:18 PM (6,419 Views)
those
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Shadow
9 May 2012, 01:23 PM
The changes to CGT for foreign investors won't have any impact on property prices.

The Foreign Investment Review Board approved 9771 real estate investments in 2010/11. Approximately 450,000 property sales are conducted in Australia each year. So foreign investors make up about 2% of the market. Of that tiny proportion of the market, how many would be buying in order to flip/sell for a quick profit? Even fewer. Most foreign investors are probably of the 'buy and hold' variety, or are buying as a currency hedge or hedge against strife in their own country. Very few would be planning to sell. And in any case...

'The Government will remove the 50 per cent capital gains tax (CGT) discount for non-residents on capital gains accrued after 7:30pm (AEST) 8 May 2012. The CGT discount will continue to be available for capital gains accrued prior to this time'

So if they sell this year, they still get a CGT discount for all gains up until this point. It only affects foreign investors who choose to sell in a few years time. If, as the bears believe, we don't have much capital gain for the next few years, it's going to make zero difference.

This budget has been a net positive for house prices, because it gives money to people who are more likely to spend it, discourages saving, and returns us to surplus enabling the RBA to further reduce interest rates.
It's going to adversely affect the potential future returns of any foreign property holder, making the investment less attractive, and increasing the incentive to sell the property.

It's going to adversely affect the potential future returns of any future foreign property buyer, making the investment less attractive, and decreasing the incentive to buy the property.

The only way this wouldn't affect prices *by much* is if the number of foreign property holders and potential future buyers is low, which I agree with you probably is the case.

edit: "property" = "investment property"
Edited by those, 9 May 2012, 02:06 PM.
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Future
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those
9 May 2012, 02:02 PM
Shadow
9 May 2012, 01:23 PM
The changes to CGT for foreign investors won't have any impact on property prices.

The Foreign Investment Review Board approved 9771 real estate investments in 2010/11. Approximately 450,000 property sales are conducted in Australia each year. So foreign investors make up about 2% of the market. Of that tiny proportion of the market, how many would be buying in order to flip/sell for a quick profit? Even fewer. Most foreign investors are probably of the 'buy and hold' variety, or are buying as a currency hedge or hedge against strife in their own country. Very few would be planning to sell. And in any case...

'The Government will remove the 50 per cent capital gains tax (CGT) discount for non-residents on capital gains accrued after 7:30pm (AEST) 8 May 2012. The CGT discount will continue to be available for capital gains accrued prior to this time'

So if they sell this year, they still get a CGT discount for all gains up until this point. It only affects foreign investors who choose to sell in a few years time. If, as the bears believe, we don't have much capital gain for the next few years, it's going to make zero difference.

This budget has been a net positive for house prices, because it gives money to people who are more likely to spend it, discourages saving, and returns us to surplus enabling the RBA to further reduce interest rates.
It's going to adversely affect the potential future returns of any foreign property holder, making the investment less attractive, and increasing the incentive to sell the property.

It's going to adversely affect the potential future returns of any future foreign property buyer, making the investment less attractive, and decreasing the incentive to buy the property.

The only way this wouldn't affect prices *by much* is if the number of foreign property holders and potential future buyers is low, which I agree with you probably is the case.

edit: "property" = "investment property"
But at the end of the day, the Chinese probably know the following:

-- Australia has a massive housing shortage so the property prices will continue to increase
-- Our resource boom is so massive that we will be loaded with cash for a lonnnngggg time
-- We have a population explosion and everyone in the world wants to live in Australia

Who cares a piddly CGT? I would think more Chinese would love to own our property.

And I would love to be the one making the profit on it.

Listen to the Shadow. This guy is onto it.
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hoofarted
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Seriously? WTF? Damn trolls trying to tell me what to do now?
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themoops
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hoofarted
9 May 2012, 03:16 PM
Seriously? WTF? Damn trolls trying to tell me what to do now?
He looks like he's come over from whirlpool, bunch of snotty little turds(and big ones) over there.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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WestAussie
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Want to see where all the steel goes? Where all the coal gets used. What all the resource 'boom' gets made into...

Friend is over there right now teaching english, (and to pick up a chinese lass) but the point being... I think he said Zhengzhou I'd have to check but they now have over 60 million empty homes, enough for 3 times the entire of Australia. to have a house EACH 3 times over. He went for a drive and yer, its real. Entire cities just empty. Nothing. Like sydney, melbourne, perth just with nothing in them but empty buildings like a nuclear bomb went off and everyone ran away. Each province is told 'have 8-10% growth on your books this year' so they have been building. Lucky the government has such a tight control over everything because as soon as china decided ok. stop. We have enough to be self sufficient it will be like hitting a brick wall and everyone in the first world will become instantly poor. Which is looking like it might happen because they are seriously overstocked. If Greece is doing what everyone knows its doing and telling the IMF and EU to screw itself. All the money used for all that building will become a whole lot harder to obtain and those places will be sold off at cost to get rid of all that debt taken out to build them all. Its not looking pretty... Its these kinds of things that start wars.
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stinkbug
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CGT on PPOR is a bad idea because it encourages more people to hoard houses.

Oh, hang on...
---------------------------------------------------------------

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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Trojan
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stinkbug
9 May 2012, 05:41 PM
CGT on PPOR is a bad idea because it encourages more people to hoard houses.

Oh, hang on...
CGT on PPOR will make people change home a lot less.
Who wants to sell their home when they will need to pay so much CGT that they can't afford a similar place again?
Stamp duty rates already discourage baby boomers to downsize. If they want to charge CGT on PPOR then people who sell their 4 bedroom house (bought 30-40 years prior) won't even be able to buy a 2 bedroom unit after selling the house and paying CGT.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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earthsta
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Future
9 May 2012, 02:39 PM
some clueless shit
Ecept house prices are falling knob jockey. You been living under a rock?
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miw
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WestAussie
9 May 2012, 05:01 PM
Want to see where all the steel goes? Where all the coal gets used. What all the resource 'boom' gets made into...

Friend is over there right now teaching english, (and to pick up a chinese lass) but the point being... I think he said Zhengzhou I'd have to check but they now have over 60 million empty homes, enough for 3 times the entire of Australia. to have a house EACH 3 times over. He went for a drive and yer, its real. Entire cities just empty. Nothing. Like sydney, melbourne, perth just with nothing in them but empty buildings like a nuclear bomb went off and everyone ran away. Each province is told 'have 8-10% growth on your books this year' so they have been building. Lucky the government has such a tight control over everything because as soon as china decided ok. stop. We have enough to be self sufficient it will be like hitting a brick wall and everyone in the first world will become instantly poor. Which is looking like it might happen because they are seriously overstocked. If Greece is doing what everyone knows its doing and telling the IMF and EU to screw itself. All the money used for all that building will become a whole lot harder to obtain and those places will be sold off at cost to get rid of all that debt taken out to build them all. Its not looking pretty... Its these kinds of things that start wars.
Those houses will be filled, and in most places the building has stopped for now.

About 5 years ago China launched a project to build 400 small cities (.5-1M population) to take up the mass migration from the countryside that was otherwise going to the big cities like Beijing, Shanghai, Guangzhou, Shenzhen, Xiamen, etc.

Around Zhengzhou would be a prime target as there is a focus on moving industry to middle and west China. Hon Hai (also known as Foxconn) alone just opened factories which will employ well in excess of 100,000 people in/near Zhengzhou. Those workers will come from elsewhere and need housing.

There are also big areas of empty buildings in places like Chongqing that date from the late 1990s. These buildings will probably need to be knocked down if they haven't already. Although.... Hon Hai just opened up in Chongqing as well.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Rastus2
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Shadow
9 May 2012, 01:23 PM
The changes to CGT for foreign investors won't have any impact on property prices.

The Foreign Investment Review Board approved 9771 real estate investments in 2010/11. Approximately 450,000 property sales are conducted in Australia each year. So foreign investors make up about 2% of the market. Of that tiny proportion of the market, how many would be buying in order to flip/sell for a quick profit? Even fewer. Most foreign investors are probably of the 'buy and hold' variety, or are buying as a currency hedge or hedge against strife in their own country. Very few would be planning to sell. And in any case...

'The Government will remove the 50 per cent capital gains tax (CGT) discount for non-residents on capital gains accrued after 7:30pm (AEST) 8 May 2012. The CGT discount will continue to be available for capital gains accrued prior to this time'

So if they sell this year, they still get a CGT discount for all gains up until this point. It only affects foreign investors who choose to sell in a few years time. If, as the bears believe, we don't have much capital gain for the next few years, it's going to make zero difference.

This budget has been a net positive for house prices, because it gives money to people who are more likely to spend it, discourages saving, and returns us to surplus enabling the RBA to further reduce interest rates.
oh classic.. I didn't know about this change...

Thus, hearing about it now, with a post of yours attempting (and failing) to explain how it will not affect overseas investors in like winning the lotto twice.

So you honestly think this will not have any impact at all ?

too funny... I guess you would think the same thing if -ve gearing was removed from today onwards... after all, those who already bought before today are fine.

Classic... :pop:

Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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