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Get Up! End Negative Gearing & Property Buyer / First Home Buyer FHB Strike; 40,000 First Home Buyers On Strike - David Collyer
Topic Started: 16 Mar 2011, 08:59 AM (25,078 Views)
BubbleBoy
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Strindberg
26 Mar 2011, 02:24 PM
Capital gains are NOT taxed on a concessional basis. The 50% application replaced the previous index linked policy. It is not clear whether the new system collects more or less than the previous system. Any after cost capital gains less than twice CPI are now taxed more heavily than previously. The previous system was never viewed as a concession - why should this one be viewed as a concession? People now have to pay capital gains tax where none was due previously. It appears that the change was made for administrative simplicity reasons rather than to gift tax relief.

My main point in these posts is not to address the desirability or otherwise of quarantining. The issue I am addressing is the false presentation that people are being given a perk. It is rather the other way around, income earning asset holders who borrow are treated like everyone else under the tax system. In practical reality the campaign proponents are not asking for the removal of a perk - none exists. They are asking for the introduction of a penalty - ie the introduction of quarantining. I already recognised the non-commercial loss provisions issue - that was done to address the hobby abuse and is recognised as a penalty. Similar application of quarantining to this issue should also be recognised as the introduction of a penalty rather than getting rid of a perk.
a) A 50% discount is a concession. Even the government in its yearly tax expenditure statements categorizes it as a concession and values it in lost revenue. I get your point about inflation and the old indexation system. If you want to argue that we should go back to indexation for CG I will respond fine - lets only allow a deduction for the *real* interest rate - that is consistent.

If you want to argue for maintaining a 50% discount then I say fine, lets do what Henry suggested and put a 50% discount on net rental losses also (though he might have said 40%).


b) As I said in my other post, a perk does not necessarily come about via a deliberate legislative action.

If you look at the original federal income tax legislation it is quite thin. Yet the current day one is very thick. A major part of this is because the original one was relatively simple, yet because of its often arbitrary rules (eg judges using old trust law to distinguish what is and isn't assessable) there were so many items that benefitted from concessional or no tax and a piecemeal approach was used to fix this.

Your basic argument is that negative gearing is in line with the spirit of the tax laws. I believe that the same thing was said about CG's being 100% tax free when CGT legislation was proposed in the 80's - after all, they were tax free not due to legislative intervention, just because that is the way things had turned out.
My name is based on a Seinfeld character, not on a belief of a housing bubble.
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Rastus2
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BubbleBoy
26 Mar 2011, 02:37 PM
a) A 50% discount is a concession. Even the government in its yearly tax expenditure statements categorizes it as a concession and values it in lost revenue. I get your point about inflation and the old indexation system. If you want to argue that we should go back to indexation for CG I will respond fine - lets only allow a deduction for the *real* interest rate - that is consistent.

If you want to argue for maintaining a 50% discount then I say fine, lets do what Henry suggested and put a 50% discount on net rental losses also (though he might have said 40%).


b) As I said in my other post, a perk does not necessarily come about via a deliberate legislative action.

If you look at the original federal income tax legislation it is quite thin. Yet the current day one is very thick. A major part of this is because the original one was relatively simple, yet because of its often arbitrary rules (eg judges using old trust law to distinguish what is and isn't assessable) there were so many items that benefitted from concessional or no tax and a piecemeal approach was used to fix this.

Your basic argument is that negative gearing is in line with the spirit of the tax laws. I believe that the same thing was said about CG's being 100% tax free when CGT legislation was proposed in the 80's - after all, they were tax free not due to legislative intervention, just because that is the way things had turned out.


Bravo.


I believe this debate will devolve into the "well tough kuck because the government is not going to change its tax laws' situation rather than a good conclusion as to why negative gearing in its current form should continue... More evidence that the practice of neg gearing for IP's is not based on good reasons, but rather, fear campaigns and political lack of backbone to follow through with changes that have been proposed.

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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matthew_50
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"Buyers Strike “Irresponsible”"

I have a balanced example for you:

my cousin moved to the US, bought a place to live in, bought a place as an investment...

now he wants to come back and live in Melbourne, and he can't for two reasons:

1) all his US property is underwater and he'd loose all his capital (though obviously cutting and running would be the best option... which brings us to...)
2) the Melbourne market has boomed so much there is no way he can get in NOW!

if a buyer's strike had told him not to buy in the US, his financial life there would not have been completely ruined.
however
if a buyers strike had told him not to buy in Melbourne when he had the chance... well, he'd be in pretty much the situation he is now... priced out.


as I said before, I think the idea of a buyers strike is silly, but I voted for it anyway, because what IS crucial is that everyone gets balanced information about the market... and it's too biased at the moment... negative aspects are pretty much only discuses on PDS fine print... its also important to fix this attitude in aus that "buying a house, and an investment on a 100% loan HAS to be done! and renters are second class citizens!"


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Strindberg
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matthew_50
26 Mar 2011, 11:01 PM
"Buyers Strike “Irresponsible”"

I have a balanced example for you:

my cousin moved to the US, bought a place to live in, bought a place as an investment...

now he wants to come back and live in Melbourne, and he can't for two reasons:

1) all his US property is underwater and he'd loose all his capital (though obviously cutting and running would be the best option... which brings us to...)
2) the Melbourne market has boomed so much there is no way he can get in NOW!

if a buyer's strike had told him not to buy in the US, his financial life there would not have been completely ruined.
however
if a buyers strike had told him not to buy in Melbourne when he had the chance... well, he'd be in pretty much the situation he is now... priced out.


as I said before, I think the idea of a buyers strike is silly, but I voted for it anyway, because what IS crucial is that everyone gets balanced information about the market... and it's too biased at the moment... negative aspects are pretty much only discuses on PDS fine print... its also important to fix this attitude in aus that "buying a house, and an investment on a 100% loan HAS to be done! and renters are second class citizens!"


Property investors will be happy with a buyer's strike. They'll be able to pick the properties up cheaper for the duration of the strike. New households are forming all the time, many of which would normally move into the houses vacated by those moving from renting to buying. That will put pressure on rental vacancies which will put upward pressure on rents. Big win for the PIs. As soon as the strike ends there'll but a flood of FHBs pushing prices up. A strike can't change long term demand - it'll just create a wiggle in the trend line. The losers will be the renters, some of whom are struggling, who will have to pay increased rent due to the strike.
Who is the strike aimed at?
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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Mahamed
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Morbidly Obese

The FHB Strike campaign jumped to 4th position this weekend, get voting folks, get it to no 1, another 200 votes is all it needs !
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Mr Wu
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Mahamed
28 Mar 2011, 08:29 AM
The FHB Strike campaign jumped to 4th position this weekend, get voting folks, get it to no 1, another 200 votes is all it needs !
Wu aks what happen if it get there?
Mohamed win steak knives?

Wu laugh at futility :laughing:
Australia popilation 22,601,619
get up votes 2483

Taht be about 0.01% of population care :laughing:
Edited by Mr Wu, 28 Mar 2011, 08:57 AM.
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Deleted User
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Mr Wu
28 Mar 2011, 08:49 AM
Wu aks what happen if it get there?
Mohamed win steak knives?

Wu laugh at futility :laughing:
Australia popilation 22,601,619
get up votes 2483

Taht be about 0.01% of population care :laughing:
Reminds me of your IQ......

Do you care about affordability?
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peter fraser
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Mahamed
28 Mar 2011, 08:29 AM
The FHB Strike campaign jumped to 4th position this weekend, get voting folks, get it to no 1, another 200 votes is all it needs !
I assume that you do know that any change to taxation laws won't be retrospective. That means that it will only affect new entrants, it won't make any change to existing tax arrangements on existing IP. I assume that will likely make existing mum and dad investors hang onto what they have, given their (and yours) mistaken belief that NG is important.

That may have consequences that you haven't thought through. For example I would prefer to accumulate any tax losses and claim them against my capital gains when I sell. That helps keep me in a lower tax bracket in the year of sale, and maximises my tax deduction. NG simply brings that tax deduction forward, it doesn't change the end result markedly, although I argue that a serious investor would be better off without NG.

I hope that you get what you want, that way investing in residential property combined with lower prices in Brisbane (but not lower rents) might just become attractive for me again.

Where do I sign up?????

I'm all for private investment in public housing......

Any expressed market opinion is my own and is not to be taken as financial advice
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Mr Wu
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pauk
28 Mar 2011, 08:59 AM
Reminds me of your IQ......

Wu say why always the attacks?
Wu ask do rent go up, puke not happy?

Quote:
 
Do you care about affordability?

Wu only buy what he can afford
Wu can afford 5 bedroom house at sunnybank, affordability for wu ok
Dole bludger no afford this, he need rent like always
Low income worker no afford this, he also rent like always, that what he can afford.
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Deleted User
Deleted User

Mr Wu
28 Mar 2011, 09:07 AM
Wu say why always the attacks?
Wu ask do rent go up, puke not happy?



Wu only buy what he can afford
Wu can afford 5 bedroom house at sunnybank, affordability for wu ok
Dole bludger no afford this, he need rent like always
Low income worker no afford this, he also rent like always, that what he can afford.
Yes, I always reply to you with an attack......not, that's you buddy......

So you only care about your affordability.....sad Mr Wu.

Do you care about young couples starting out? I guess not......
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