Society/Culture Australian Property Prices to Crash?

[FRUMPY]

The problem with investment property owners is not that they dont pay tax. It’s that they earn income from contributing virtually nothing to society. Extracting land rent enabling them to retire early Without working like the rest of us.

they should be investing in businesses and ideas. Not artificially constrained land supply.

Contributing to society:

They buy the land - somebody sells it to them (theres a job)
They might have to demolish an old house - (theres a job for someone)
They need to build a house - (theres lots of jobs for people)
They need to rent it out and probably get an agent to look after things - (theres a job for someone)
They let it out to people complaining they can afford a house - thus helping them out (even though that person is paying off the investors property for them and thus contributing to the investor getting more money to buy more properties)
They need to sell the house - (theres a job for someone)

 

[Taylor]

Negative gearing is the government allowing private people to carry the risk for them in housing people.

 

[Royal Flush]

Negative gearing is the government allowing private people to carry the risk for them in housing people.

Whilst also ensuring they don't become a drain on welfare in their later years.

On Pixel 4 using BigFooty.com mobile app

 

[Seeds]

Contributing to society:

They buy the land - somebody sells it to them (theres a job)
They might have to demolish an old house - (theres a job for someone)
They need to build a house - (theres lots of jobs for people)
They need to rent it out and probably get an agent to look after things - (theres a job for someone)
They let it out to people complaining they can afford a house - thus helping them out (even though that person is paying off the investors property for them and thus contributing to the investor getting more money to buy more properties)
They need to sell the house - (theres a job for someone)

That’s not what contributing to society is. By that logic paying 100 people to dig a pointless hole is contributing to society.

it’s not.

productive capital creation or developing new tech/ideas that lead to improvements in efficiency of service or providing useful labour service is contribution to society. being a unnecessary middle man extracting rent is not. It’s taking from society.

If a property investor doesnt buy a property then the price of land falls and a home owner eventually at some lower price buys that property and employs all the same people giving them all the same jobs. Only this time there isnt some property investor extracting rent so he doesn’t have to work for a living at everyone else’s expense.

 

[Gavin Excell]

Then dont buy the house worth $1m......

True but if they don't have minimum deposits then young people can get themselves in all sorts of trouble

 

[Suspense]

Was there examples where that money exceeded the amount the person getting the refund had paid already regarding negative gearing?

I don't consider you getting your own money back to be taxpayers money

Negative Gearing only has a distortive effect because of the ineffective way in which we tax Capital Gains.
Negative Gearing would be of no net benefit to the investor if Capital Gains were tax appropriately (adjusted for inflation).

50% CGT discount (approx. $10b per year) and Main Residence CGT exemption (approx. $74b per year) are clearly distortive when it comes to progressive taxation. They also have an inflationary effect on house prices.

On estimates, my property has risen approx $250k - $300k in the last 5 years. Assuming I sold today, it's absurd that I wouldn't pay a cent of tax on that gain - a gain that, let's be honest, I did **** all to earn (as opposed to the x% of the money I lose to tax on earnings generated from my own toil).

Removing these tax distortions has the effect of increasing vertical equity by broadening the revenue base - providing for a lowering taxes on productivity (income tax) and a lowering corporate taxes to encourage economic growth - both of which provide a benefit to all Australians - rather than just those with access to capital.

Of course, no one will fix our CGT system because those who are already in the market see these CGT concessions as some sort of divinely ordained rights.

 

[Deliverance]

Was there examples where that money exceeded the amount the person getting the refund had paid already regarding negative gearing?

I don't consider you getting your own money back to be taxpayers money

Money you've paid in personal income tax isn't your money. Once you've paid it during the year, it's public money.

Yeah, because that only happens in the property market

This is the property thread.

 

[Taylor]

50% CGT discount (approx. $10b per year) and Main Residence CGT exemption (approx. $74b per year) are clearly distortive when it comes to progressive taxation. They also have an inflationary effect on house prices.

The volatility that comes from not encouraging longer term holding of assets is far, far more damaging and dangerous to all markets and the economy at large than the government not getting to take an extra 25% of the increase in value of assets within it.

 

[Taylor]

Money you've paid in personal income tax isn't your money. Once you've paid it during the year, it's public money.


This is the property thread.

Money that you've paid in excess of your obligation is your money. It is actually all your money but the money returned to you after what you've owed the nation is especially your money.

 

[Suspense]

The volatility that comes from not encouraging longer term holding of assets is far, far more damaging and dangerous to all markets and the economy at large than the government not getting to take an extra 25% of the increase in value of assets within it.

This thread is full of people telling us that Property is a great investment - independent of any tax-driven incentives.
Why do you think people would no longer invest in Property if those incentives did not exist?

Investments decisions should be made for rational economic reasons - not whatever quirks in the tax system you can exploit.

 

[Royal Flush]

Negative Gearing only has a distortive effect because of the ineffective way in which we tax Capital Gains.
Negative Gearing would be of no net benefit to the investor if Capital Gains were tax appropriately (adjusted for inflation).

50% CGT discount (approx. $10b per year) and Main Residence CGT exemption (approx. $74b per year) are clearly distortive when it comes to progressive taxation. They also have an inflationary effect on house prices.

On estimates, my property has risen approx $250k - $300k in the last 5 years. Assuming I sold today, it's absurd that I wouldn't pay a cent of tax on that gain - a gain that, let's be honest, I did fu** all to earn (as opposed to the x% of the money I lose to tax on earnings generated from my own toil).

Removing these tax distortions has the effect of increasing vertical equity by broadening the revenue base - providing for a lowering taxes on productivity (income tax) and a lowering corporate taxes to encourage economic growth - both of which provide a benefit to all Australians - rather than just those with access to capital.

Of course, no one will fix our CGT system because those who are already in the market see these CGT concessions as some sort of divinely ordained rights.

Negative Gearing only has a distortive effect because of the ineffective way in which we tax Capital Gains.
Negative Gearing would be of no net benefit to the investor if Capital Gains were tax appropriately (adjusted for inflation).

50% CGT discount (approx. $10b per year) and Main Residence CGT exemption (approx. $74b per year) are clearly distortive when it comes to progressive taxation. They also have an inflationary effect on house prices.

On estimates, my property has risen approx $250k - $300k in the last 5 years. Assuming I sold today, it's absurd that I wouldn't pay a cent of tax on that gain - a gain that, let's be honest, I did fu** all to earn (as opposed to the x% of the money I lose to tax on earnings generated from my own toil).

Removing these tax distortions has the effect of increasing vertical equity by broadening the revenue base - providing for a lowering taxes on productivity (income tax) and a lowering corporate taxes to encourage economic growth - both of which provide a benefit to all Australians - rather than just those with access to capital.

Of course, no one will fix our CGT system because those who are already in the market see these CGT concessions as some sort of divinely ordained rights.

You, personally won't pay tax on gains because it's your principal place of resident's.

Usually people sell and buy again into the market.
So you have not made any money doing f.ck all.

You've probably contributed to tax with stamp duty as well and fees existing and re-entering the market.
Fail to understand your logic

On Pixel 4 using BigFooty.com mobile app

 

[Taylor]

This thread is full of people telling us that Property is a great investment - independent of any tax-driven incentives.
Why do you think people would no longer invest in Property if those incentives did not exist?

Investments decisions should be made for rational economic reasons - not whatever quirks in the tax system you can exploit.

Because the holding of the asset for a significant reduction in gains tax slows down movements up and down in the market. You remove that brake and volatility in the housing market will open to day/week/month traders seeking to move places on for much smaller returns over a shorter period.

It's the same process in the stock market by the way

 

[Suspense]

You, personally won't pay tax on gains because it's your principal place of resident's.

Usually people sell and buy again into the market.
So you have not made any money doing f.ck all.

*residence

Absolutely I have. My wealth has increased by ~$300k through an investment decision. That's great - well done to me. I should also pay tax.

You've probably contributed to tax with stamp duty as well and fees existing and re-entering the market.
Fail to understand your logic

On Pixel 4 using BigFooty.com mobile app

Exempt.

 

[Taylor]

You've probably contributed to tax with stamp duty as well

This should be tax deductible too, but isn't.

 

[Suspense]

Because the holding of the asset for a significant reduction in gains tax slows down movements up and down in the market. You remove that brake and volatility in the housing market will open to day/week/month traders seeking to move places on for much smaller returns over a shorter period.

It's the same process in the stock market by the way

The reduction doesn't scale with the length of ownership. It's a 50% reduction after one year - if anything it discourages long-term holds because the benefit of the 50% is at is most generous after one year - after 10-15 years the effect of inflation has eaten away at the benefit of 50% CGT discount.

The comparison to the stock market is invalid - assume rational investors and then compare the costs of entry and re-entry into the Property market vs buying/selling shares.

 

[Suspense]

This should be tax deductible too, but isn't.

It forms part of the cost base - why on earth would it be tax-deductible?

 

[Taylor]

The reduction doesn't scale with the length of ownership. It's a 50% reduction after one year - if anything it discourages long-term holds because the benefit of the 50% is at is most generous after one year - after 10-15 years the effect of inflation has eaten away at the benefit of 50% CGT discount.

The comparison to the stock market is invalid - assume rational investors and then compare the costs of entry and re-entry into the Property market vs buying/selling shares.

It's exactly the same thing as the stock market, it reduces the viability of speculative short term investment which reduces volatility. A year is long term investment. 18 months is a lifetime in investment terms for a business.

 

[Taylor]

It forms part of the cost base - why on earth would it be tax-deductible?

Because it's an expense of doing business that isn't part of a on sellable improvement to the product.

 

[FRUMPY]

True but if they don't have minimum deposits then young people can get themselves in all sorts of trouble

Absolutely

 

[Suspense]

It's exactly the same thing as the stock market, it reduces the viability of speculative short term investment which reduces volatility. A year is long term investment. 18 months is a lifetime in investment terms for a business.

The comparison to the stock market is invalid - assume rational investors and then compare the costs of entry and re-entry into the Property market vs buying/selling shares.

 

[Suspense]

Because it's an expense of doing business that isn't part of a on sellable improvement to the product.

It's a cost of acquiring an asset (capital) - not a cost of leasing the asset you already own to other parties (income).

This is 1st year Accounting stuff.

 

[Cuzz09]

oh well just let people do whatever

On SM-G925I using BigFooty.com mobile app

 

[Deliverance]

Money that you've paid in excess of your obligation is your money. It is actually all your money but the money returned to you after what you've owed the nation is especially your money.

OK, let's just do away with tax altogether and let everyone fend for themselves.

 

[Royal Flush]

This should be tax deductible too, but isn't.

States easy cash grab. Because they know the feds will provide 1st home owner concessions.

Hence why new land is released by state governments without the appropriate infrastructure to support it.

Plus rates that states rely on heavily
The approval deals they do with developers, means the reduce their minimum land size to squeeze in as many as possible .


On Pixel 4 using BigFooty.com mobile app

 

[Royal Flush]

*residence

Absolutely I have. My wealth has increased by ~$300k through an investment decision. That's great - well done to me. I should also pay tax.


Exempt.

You won't be exempt for a second time.

The gains you made , means you pay more to enter.


So now your in a dilemma.
Stay ideological or release some equity and buy another house.








On Pixel 4 using BigFooty.com mobile app