# What if you could only own a PPOR?



## young-gun (8 May 2012)

I was doing a bit of reading, and came across a slightly outdated article that outlined how many australians own investment properties.

http://www.prosper.org.au/2011/04/21/negative-gearing-reform-proposals-much-needed/



> About 1.7 million property owners used negative gearing in the 2009 financial year, claiming rental losses as a tax offset. This generated a net rental loss of $6.5 billion for the financial year, Tax Office figures show.
> They show about *1.19 million Australians own one investment property. About 294,000 have two investment properties, while those with three number 88,300.
> Meanwhile, about 14,100 Australians have six or more investment properties, the figures show.*




so in total thats approx. 2.06 million properties, whether they be units houses, town houses whatever, that investors owned at this particular point in time.

so my question is(which im sure alot will disagree with) should we even be allowed to own investment properties? or should we be limited to perhaps one per family? if you were to flood the market with 2 million properties around australia prices would crash. making it possible for all those struggling families that aren't investment minded to own a house instead of renting and helping others become wealthy?

now you can make the argument that that's bad luck, and you're motivated enough to educate yourself and take the risk of investing in an IP, but so what, maybe some prefer to not have the financial burden, or a simply to afraid of taking the risk which is fair enough. and you couldnt complain that it removes a form of wealth creation from you, because your own house to begin with would be far cheaper, savings you perhaps hundreds of thousands in some instances, allowing you to save more and invest elsewhere(perhaps not returning the riciculous gains of property in the past, but still returning). ive heard people say "investors are putting an affordable roof over families' heads who otherwise couldnt afford to buy". well if they didnt inflate prices to begin with maybe those families would eb able to get into the market?

this would also limit the potential for a crash, and control house prices, and keep banks a little more grounded. not to mention the gov would have stacks more money.

anyway i have nothing against investors by any means, in fact i intend on investing in property myself eventually, just wanted to get peoples thoughts on this. I'm sure there a flaws and reasons for why this couldnt/shouldnt happen and I'd like to hear them.


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## Miss Hale (8 May 2012)

My initial thoughts... I think it's asolutely fine for people to own an investment property (or several if they want to) but they should not receive favourable treatment like negative gearing etc.  Let the market decide the value of property without Govt. interference.  There will always be a need for some rental properties for various reasons so we need someone to own IPs to provide the rental properties  .


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## young-gun (8 May 2012)

Miss Hale said:


> My initial thoughts... I think it's asolutely fine for people to own an investment property (or several if they want to) but they should not receive favourable treatment like negative gearing etc.  Let the market decide the value of property without Govt. interference.  There will always be a need for some rental properties for various reasons so we need someone to own IPs to provide the rental properties  .




the removal of negative gearing would see a hell of alot of people forced out of their IP's. 
why do we need rental properties? the only reasons i can think of that people rent is because they are expecting housing to fall to more reasonable prices, they can't afford a house, or they don't want to be weighed down with the responsibility of a reasonably sized mortgage. all of these issues are removed if house prices fell. perhaps some housing for the really low income earners, but thats what housing commission houses are for. I'm not sure if they are owned by the government, or investors, but it wouldnt be difficult for them to just buy up a few more houses to cater for this group.


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## Ves (8 May 2012)

So where do all the renters go in your master plan? Especially the people that do not want to rent a place because they like the freedom of being able to move around when they like.

By the way, if negative gearing only costs the government a maximum of $3 billion  (your $6.5 billion figure times the 45% marginal tax rate) how are they saving a truck load of cash?  This isn't even enough to fill a third of the much talked about surplus hole.  It's just more money for the government to waste on something else if you ask me.

I'll also add that there were countries who do not have negative gearing and had / still have a housing bubble.


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## young-gun (8 May 2012)

Ves said:


> So where do all the renters go in your master plan? Especially the people that do not want to rent a place because they like the freedom of being able to move around when they like.
> 
> By the way, if negative gearing only costs the government a maximum of $3 billion  (your $6.5 million times the 45% marginal tax rate) how are they saving a truck load of cash?  This isn't even enough to fill a third of the much talked about surplus hole.  It's just more money for the government to waste on something else if you ask me.
> 
> I'll also add that there were countries who do not have negative gearing and had / still have a housing bubble.




that was my point, renters would most likely purchase, as the reason for renting is largely due to unaffordability. also as i said, perhaps we could allow one per person, that way there is still supply for the little demand that would be remaining. but even then i think it wouldn't have enough of an affect, as single IP owners are by far the largest portion of homes owned by investors.

I have no doubt they would waste it, but hopefully even a small margin of it would go towards something of use.

then perhaps negative gearing isnt the largest reason for people owning IP's? other countries obviously still have plenty of RE investors despite the lack of tax breaks. or maybe I am wrong in assuming that investors have helped inflate the prices so heavily, but i wouldve thought the purchase of 2 million residences would most certainly have a large affect over the years.


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## Ves (8 May 2012)

young-gun said:


> that was my point, renters would most likely purchase, as the reason for renting is largely due to unaffordability. also as i said, perhaps we could allow one per person, that way there is still supply for the little demand that would be remaining. but even then i think it wouldn't have enough of an affect, as single IP owners are by far the largest portion of homes owned by investors.
> 
> I have no doubt they would waste it, but hopefully even a small margin of it would go towards something of use.
> 
> then perhaps negative gearing isnt the largest reason for people owning IP's? other countries obviously still have plenty of RE investors despite the lack of tax breaks. or maybe I am wrong in assuming that investors have helped inflate the prices so heavily, but i wouldve thought the purchase of 2 million residences would most certainly have a large affect over the years.



 I  can't answer for everyone but I didn't invest in property because of the tax benefits.  In my opinion that is lunacy.  I bought because  I thought a newly renovated one bedroom unit worth  $130k renting for $150 per week was pretty good value in Ballarat. Probably won't shoot the lights out, but  rent pretty much pays the mortgage. I only utilised negative gearing in the first year.  I paid down my debt heavily to increase the cash flow. I don't think there is much downside in this area. 

I think housing is so unaffordable to a lot of people because they struggle with the concept of sacrificing the pleasures of today, to save for expensive long-term purchases like property. They also have unrealistic expectations for their first purchase. I gaurantee that if housing prices were 30-40-50% cheaper people would be still complaining it was all too hard.

I don't see why we need to punish those who want to create wealth.  Perhaps limit negative gearing but not asset ownership.

I would have thought that those who invest early and frequently and do it well were saving the government money because they will never require the age pension.


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## young-gun (8 May 2012)

Ves said:


> I  can't answer for everyone but I didn't invest in property because of the tax benefits.  In my opinion that is lunacy.  I bought because  I thought a newly renovated one bedroom unit worth  $130k renting for $150 per week was pretty good value in Ballarat. Probably won't shoot the lights out, but  rent pretty much pays the mortgage. I only utilised negative gearing in the first year.  I paid down my debt heavily to increase the cash flow. I don't think there is much downside in this area.




well there you go you are a case in point, not all investors are concerned about the ability to negative gear, hence the inflation of property prices overseas from investors.



> I think housing is so unaffordable to a lot of people because they struggle with the concept of sacrificing the pleasures of today, to save for expensive long-term purchases like property. They also have unrealistic expectations for their first purchase. I gaurantee that if housing prices were 30-40-50% cheaper people would be still complaining it was all too hard.




agree to an extent, but i still think they are unaffordable, i honestly don't know how guys earning 60k a year with 3 kids at the age of 38 for example can manage. either they rent, or live in a run down little place on the very very outskirts of the city.



> I don't see why we need to punish those who want to create wealth.  Perhaps limit negative gearing but not asset ownership.
> 
> I would have thought that those who invest early and frequently and do it well were saving the government money because they will never require the age pension.



it's not about punishing them, i was just speculating about what it would be like. keep in mind if you were only allowed to hold one invest property, prices would be down significantly(i think anyway) and all those investors would have alot more play money to invest in other ventures. it may even be better for the economy overall as people invest into business ideas etc and increase employment.


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## Julia (8 May 2012)

Ves said:


> So where do all the renters go in your master plan? Especially the people that do not want to rent a place because they like the freedom of being able to move around when they like.
> 
> By the way, if negative gearing only costs the government a maximum of $3 billion  (your $6.5 billion figure times the 45% marginal tax rate) how are they saving a truck load of cash?  This isn't even enough to fill a third of the much talked about surplus hole.  It's just more money for the government to waste on something else if you ask me.
> 
> I'll also add that there were countries who do not have negative gearing and had / still have a housing bubble.






Ves said:


> I think housing is so unaffordable to a lot of people because they struggle with the concept of sacrificing the pleasures of today, to save for expensive long-term purchases like property. They also have unrealistic expectations for their first purchase. I gaurantee that if housing prices were 30-40-50% cheaper people would be still complaining it was all too hard.
> 
> I don't see why we need to punish those who want to create wealth.  Perhaps limit negative gearing but not asset ownership.
> 
> I would have thought that those who invest early and frequently and do it well were saving the government money because they will never require the age pension.



+1 on all the above comments.

Let's remember that many people who are renting have never done otherwise and have no hope/aspiration of owning a home.  They live from week to week on their low incomes for a variety of reasons.  They would never put together even the most minimal deposit to buy property.

Young gun, you're perhaps making the fundamental error of attributing your own initiative to the population at large.  It just ain't so.


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## Smurf1976 (8 May 2012)

There are many people who, for whatever reason, prefer to rent and as such landlords are providing a legitimate service by investing in residential property.

A classic example of someone I know. Lives in Melbourne but has spent the past 10 months working in Hobart, now returning to Melbourne. Needless to say, he rented a house since buying one for that length of stay would be just silly, as would spending that long in a hotel.

I can follow an argument against those who simply speculate on property, leaving the place empty and not offering it for rent. But those providing rentals are simply running a legitimate business providing a service which many people wish to purchase.


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## trainspotter (8 May 2012)

Rent a property for $400 per week or own your own home for $500 per week ..... Hmmmmmm let me think about that for a nano second. *GOSH*


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## andymac4321 (8 May 2012)

Interesting topic. My first thoughts are 
1/ If governments can restrict number of investments then this could expand to other asset classes. Shares, Art, Cars
2/ Government can dictate how you should invest? e.g. you must buy government bonds. I suspect this is a future Super change.
3/ How does the government control it? Husband and wife buy a house each and then one each for the kids. 
4/ Does this also include restrictions to companies and trusts. As most serious investors use these vehicles for asset protection. Will the same rules apply. 

Overall I am against the government dictating how I invest my money. As a property investor negative gearing is not the main part of my strategy. Paying down the properties to be cash flow positive.


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## numbercruncher (8 May 2012)

trainspotter said:


> Rent a property for $400 per week or own your own home for $500 per week ..... Hmmmmmm let me think about that for a nano second. *GOSH*





You own zip until you stop renting Money from your money dealer 

But what im sure you meant is be in the process of owning your own home ....


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## trainspotter (8 May 2012)

andymac4321 said:


> Interesting topic. My first thoughts are
> 1/ If governments can restrict number of investments then this could expand to other asset classes. Shares, Art, Cars
> 2/ Government can dictate how you should invest? e.g. you must buy government bonds. I suspect this is a future Super change.
> 3/ How does the government control it? Husband and wife buy a house each and then one each for the kids.
> ...




Great first post  !!!! Cash flow positive is the rule right now.


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## trainspotter (8 May 2012)

numbercruncher said:


> You own zip until you stop renting Money from your money dealer
> 
> But what im sure you meant is be in the process of owning your own home ....




Dude ........ bank managers fall over themselves when you can show them proven mortgage repayment history. It is the way of fiscal policy within this country. Like it or not that is how it is. Owning your own home is renting from the bank rather than paying it off the interest component of an investor. Get a grip.


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## andymac4321 (8 May 2012)

trainspotter said:


> Rent a property for $400 per week or own your own home for $500 per week ..... Hmmmmmm let me think about that for a nano second. *GOSH*




Don't forget to add $237/Month on services paid by the landlord. 

Insurance         $25/Month 
Rates               $72/Month
Water Service   $40/Month
Repairs            $100/Month


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## numbercruncher (8 May 2012)

trainspotter said:


> Dude ........ bank managers fall over themselves when you can show them proven mortgage repayment history. It is the way of fiscal policy within this country. Like it or not that is how it is. Owning your own home is renting from the bank rather than paying it off the interest component of an investor. Get a grip.





So in your own words owning your own home is *renting* from the bank - glad you have a " grip " on it Dude.


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## Glen48 (8 May 2012)

Investment Property is a think of the past now will be for a long long time.


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## trainspotter (8 May 2012)

numbercruncher said:


> So in your own words owning your own home is *renting* from the bank - glad you have a " grip " on it Dude.




Nein Nein Nein ....... you have missed the whole thrust of my reposte', by PROVING you can handle a repayment histroy and fiscal responsibilty you are more likely to engage in a meaningful obligation to the bank who will lend you money to get where you need to be. DEBT is not a dirty word. It is a means to an end. Generations of people doing this has proven it is mutually acceptable. 

Which would you rather? Paying off someone elses mortgage for 21k per annum (which means nothing as you have no asset base) or for 26k own your own home ?? (and have a repayment history that the bank will lien on?)

So glad your "grip" is substantial.


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## numbercruncher (8 May 2012)

trainspotter said:


> Nein Nein Nein ....... you have missed the whole thrust of my reposte', by PROVING you can handle a repayment histroy and fiscal responsibilty you are more likely to engage in a meaningful obligation to the bank who will lend you money to get where you need to be. DEBT is not a dirty word. It is a means to an end. Generations of people doing this has proven it is mutually acceptable.
> 
> Which would you rather? Paying off someone elses mortgage for 21k per annum (which means nothing as you have no asset base) or for 26k own your own home ?? (and have a repayment history that the bank will lien on?)
> 
> So glad your "grip" is substantial.





Using your exact specific example i'll take the 26k option  ....

Now I wonder if we asked the same question To say the average Victorian punter who 12 months ago paid 500k for a house plus 35k in interest plus 20k duty rates plus maintenance plus Insurance etc 0nly to the find your property now worth 7pc less .....

Thats like 100k ! Surely going to the Casino would of been more fun? And with an economic climate that it is I dont see the property specualtor 2011 vintage being a winner anytime soon ...

And gawd forbid should he become a distressed seller theres more massive fees to sell ...

Oh well play with fire expect to burn your fingers


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## trainspotter (8 May 2012)

numbercruncher said:


> Using your exact specific example i'll take the 26k option  ....
> 
> Now I wonder if we asked the same question To say the average Victorian punter who 12 months ago paid 500k for a house plus 35k in interest plus 20k duty rates plus maintenance plus Insurance etc 0nly to the find your property now worth 7pc less .....
> 
> ...





Whoooooooooaaaaaaa dude ......... I have never advocted for nupties to invest in property at the height of a boom cycle. I have adopted the more measured approach. I also have covered this subject on many occasions that Lemmings will always fall off a cliff. Same people who invesed in Western Kingfish when it floated. WKL I think it was called ..... do the research. 8 million gone in less than 6 months.

Property is NOT for everybody .... I have been doing this for 23 years and I am still learning objective outcomes. I am not right on everything I say nor have I implied as such. It is a black science that I try and steer people through pitfalls and possible retaliations depending on circumstances. Not once have I tried to tell FHB to "rush" out and put a noose around their necks. 

Easy does it


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## Miss Hale (8 May 2012)

Smurf1976 said:


> There are many people who, for whatever reason, prefer to rent and as such landlords are providing a legitimate service by investing in residential property.
> 
> A classic example of someone I know. Lives in Melbourne but has spent the past 10 months working in Hobart, now returning to Melbourne. Needless to say, he rented a house since buying one for that length of stay would be just silly, as would spending that long in a hotel.




Agree. Even when people relocate permenantly they often rent for a year or so until they get a feel for their new location, the market etc. so as to make a better decision when they buy.  We are renting at the moment for two reasons; one being the high property prices but also because we think we might move to a different city in a year or two so renting is a better option as it keeps our options open.


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## numbercruncher (9 May 2012)

trainspotter said:


> Whoooooooooaaaaaaa dude ......... I have never advocted for nupties to invest in property at the height of a boom cycle. I have adopted the more measured approach. I also have covered this subject on many occasions that Lemmings will always fall off a cliff. Same people who invesed in Western Kingfish when it floated. WKL I think it was called ..... do the research. 8 million gone in less than 6 months.
> 
> Property is NOT for everybody .... I have been doing this for 23 years and I am still learning objective outcomes. I am not right on everything I say nor have I implied as such. It is a black science that I try and steer people through pitfalls and possible retaliations depending on circumstances. Not once have I tried to tell FHB to "rush" out and put a noose around their necks.
> 
> Easy does it





These property threads always get too frustrating to participate in as people swap from playing the ball to playing the whole property field in a couple of posts.

My point is that property in Australia on average currently doesnt look like a good bet - and it appears that you are agreeing with me with this talk of the height of a boom cycle - which I incidentially think this height is already behind us now ....

So as a property investor of some 23 years experience have you seen a few boom cycles ?


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## trainspotter (9 May 2012)

numbercruncher said:


> These property threads always get too frustrating to participate in as people swap from playing the ball to playing the whole property field in a couple of posts.
> 
> My point is that property in Australia on average currently doesnt look like a good bet - and it appears that you are agreeing with me with this talk of the height of a boom cycle - which I incidentially think this height is already behind us now ....
> 
> So as a property investor of some 23 years experience have you seen a few boom cycles ?




My position has not changed.  I am not talking semantics, I am agreeing with you !!! Please read my posts over a three year period. I have not chanced my arm at any stage.

I repeat for comedy purposes only .......  "IN CERTAIN AREAS" it is still good money to be made with low risk. Not rocket science. Not putting it all on black at the casino. 

WOW !!!!!!!! We might actually be getting somewhere !!


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## Tink (9 May 2012)

Great posts Ves and Julia, agree.

I dont think negative gearing is the main reason that people buy investment properties, a majority do do their facts and figures before purchase. Alot are setting themselves up for their retirement, or purchasing for a stepping stone in owning their own home.

Alot bought property through the GFC -- bricks and mortar was safe for them and their properties are working for them.

Agree trainspotter, about the banks lending you money when you repay loans, credit history works in your favour.  

I also agree that there are areas that you can still make money, my opinion.


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## numbercruncher (9 May 2012)

Tink said:


> I also agree that there are areas that you can still make money, my opinion.





Very true ! Some good deals from desperate venders and ruthless mortgagee in possession that ive seen in Qld - at some point we will start seeing a bunch of positive cashflow stuff im thinking ...


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## wayneL (9 May 2012)

Re negative gearing:

It is nothing more than writing off the trading losses of your accommodation business against other income. That is totally kosher IMO.

However in every other endeavour, to get the tax deduction there must be an intention and reasonable prospect of in fact making a *trading profit*.

For instance the agricultural pursuits of city businessmen that always ran at a loss had those deductions disallowed some time ago. (Queen St farmers etc)

There is also the rule that there must be a trading profit for a certain number of years out of every seven? (Can't remember the exact figures)

If the investment property cannot fulfill these conditions that other businesses must fulfill, then I am _philosophically_ against the deduction. Losses should then be offset against future profits (trading or capital).

That's my opinion.


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## Starcraftmazter (9 May 2012)

We don't want to stop property investment - but we do want to stop property speculation. This should be done by removing government interferences in the free market of housing - things like negative gearing, stamp duties, urban growth boundaries, forcing developers to front the cash for infrastructure, capital gains concessions for property (or better yet get rid of the nonsensical capital gains tax altogether), FHOGs, planning restrictions, etc.

I am happy to let everyone in and outside of Australia to put their money into constructing new real-estate for people to live in - this is how the free market works, we we ought to embrace it instead of making it difficult for the real investors to do their job. And given we have a massive oversupply of property in Australia - if they want to contribute to it at their old peril then let them!

It would be good I think on the other hand if people were only ever allowed to invest in the construction of new property - and only owner occupiers were allowed to buy resold property. It's not really a proper investment if you are buying an already built property - because you are not contributing any way to the economy, and not creating and new capital. One exception might be buying a block of old houses and building a giant apartment complex, etc.


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## Glen48 (9 May 2012)

So TS nothing has changed in 32 years?


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## young-gun (10 May 2012)

Julia said:


> +1 on all the above comments.
> 
> Let's remember that many people who are renting have never done otherwise and have no hope/aspiration of owning a home.  They live from week to week on their low incomes for a variety of reasons.  They would never put together even the most minimal deposit to buy property.
> 
> Young gun, you're perhaps making the fundamental error of attributing your own initiative to the population at large.  It just ain't so.




i guess i was giving them the benefit of the doubt, i havent completely lost faith in the masses just yet


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## young-gun (10 May 2012)

Starcraftmazter said:


> We don't want to stop property investment - but we do want to stop property speculation. This should be done by removing government interferences in the free market of housing - things like negative gearing, stamp duties, urban growth boundaries, forcing developers to front the cash for infrastructure, capital gains concessions for property (or better yet get rid of the nonsensical capital gains tax altogether), FHOGs, planning restrictions, etc.




i don't think the government has too much influence on it all, most of what they do is simply a pain in the **** more than anything. as with most things i guess.


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## young-gun (10 May 2012)

Tink said:


> I dont think negative gearing is the main reason that people buy investment properties, a majority do do their facts and figures before purchase. Alot are setting themselves up for their retirement, or purchasing for a stepping stone in owning their own home.




im quite amazed at the amount of responses claiming they aren't in property for the tax breaks. are most of you older and bought quite some time ago? most people i know that have bought in the past 5 or so years have bought in the hope of offsetting their income, whilst owning an 'appreciating asset' that will help them towards and through retirement.

ive always been of the opinion that the quicker you can get cashflow positive the better, but there are most definitely alot of people out there that think differently.

i guess things are the way they are for a reason!


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## Ves (10 May 2012)

Starcraftmazter said:


> It would be good I think on the other hand if people were only ever allowed to invest in the construction of new property - and only owner occupiers were allowed to buy resold property. It's not really a proper investment if you are buying an already built property - because you are not contributing any way to the economy, and not creating and new capital. One exception might be buying a block of old houses and building a giant apartment complex, etc.



 Isn't that why they bought in capital gains tax?

Do you see already listed shares and related securities as being different to this?


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## Smurf1976 (11 May 2012)

Ves said:


> Do you see already listed shares and related securities as being different to this?



If BHP (for example) shares double in price then that has no real impact on anyone who doesn't already own shares in BHP. Nobody has any need to invest in this (or any other) listed company other than as a means of making a profit. There's plenty of other financial investment options for those who miss out on buying shares in one particular company at a given price.

In contrast, housing is fundamentally utilitarian in nature. It performs a necessary social function in that people need a roof over their heads. There is thus a social need to keep housing affordable whereas there is no such need to keep the price of BHP (for example) shares within any particular limit. 

The same could be said of basic food versus, say, vodka. Everybody needs food, so there's a social need for it to be affordable. But nobody actually needs vodka therefore there is far less of a social downside if the price of that increases. Etc.


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## Ves (11 May 2012)

I can see your point and I can agree to the point of the investment and other opportunities, but surely if BHP shares are struggling over the long-term it makes a measurable difference to our economy.  Firstly, large cap stocks are held in industry and retail fund portfolios.  Secondly, BHP is a large employer and a large tax payer... surely if the share price over the long term can be used as a proxy for their business performance it would be better for our economy if this did better?

Perhaps I am thinking about this too much.  I think any form of investment, whether it be housing, shares, interest or other alternatives represents the creation (or even destruction) of wealth in a measurable sense.


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## Starcraftmazter (13 May 2012)

Ves said:


> Isn't that why they bought in capital gains tax?




I don't know the official reason for the capital gains tax (indeed, one wonders how the government can justify such an idiotic tax), but I'm sure it's sole purpose is to give government money it does not deserve.



Ves said:


> Do you see already listed shares and related securities as being different to this?




Shares and property are two different things, yes.


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## im sparticus (13 May 2012)

You guys sound like the biggest bunch of commies. your not allowed to buy more than one house,  and it must be a ppor, investment properties must be new built your not allowed to speculate on certain things we will treat different types of you belongings and assets differently and tax them differently. Etc etc ect


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## StumpyPhantom (14 May 2012)

young-gun said:


> im quite amazed at the amount of responses claiming they aren't in property for the tax breaks. are most of you older and bought quite some time ago? most people i know that have bought in the past 5 or so years have bought in the hope of offsetting their income, whilst owning an 'appreciating asset' that will help them towards and through retirement.
> 
> ive always been of the opinion that the quicker you can get cashflow positive the better, but there are most definitely alot of people out there that think differently.
> 
> i guess things are the way they are for a reason!




I get the feeling the answer is buried deep inside these anecdotal observations.  Given the significant startup and ongoing interest costs, any real 'investor' in property is probably looking at a 10-year horizon, whilst being in for only 5 years suggests some degree of 'speculating' to get out with a capital gain.

So negative gearing is needed to keep you in the game for longer than you otherwise could.  But take it from me, it's really boring losing cash (which is essentially what -ive gearing is) year upon year even if the price of the property is rising, given you can't touch that until sale time.

How many of those that you know who bought recently were at property seminars where they spruiked -ive gearing and 'appreciating assets'?  The focus on the latter alone suggests speculation.  The price of the asset 20 years hence would be irrelevant unless you were looking to sell it soon.

The reality is that once you get positive cashflow, the tax breaks are still there in the form of depreciation etc.  So the -ive and +ive gearing advocates tend to also split neatly into the speculative vs investor groups. 

Except that for the next few years, there will be no capital gain (price will probably go in the opposite direction) to speak of.  So no surprise that all the speculators out there have to get into investing mode quicksmart (or move in and live there themselves) or sell out at a heavy loss.


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## maffu (14 May 2012)

Ves said:


> So where do all the renters go in your master plan? Especially the people that do not want to rent a place because they like the freedom of being able to move around when they like.




This is an important point.
I rent, and don't want to buy any time in the next 5 years regardless of price.
I want certainty in employment, which city I will be living with, and family planning kind of sorted before worrying about buying.

I could buy a 1 bedroom apartment in Western Sydney today, and then next year be working in a new location and have to suffer the large relocation costs. If I start a family, upsizing to a larger house would again suffer large relocation costs.

Its much better for me at the moment to rent a 1 bedroom place now, rather than buying a 3 bedroom place somewhere that I don't want to live, for spare rooms that I might not need for 5 years or more. Its cheap and easy to move with jobs, or upgrade in size when required.

Landlords provide a very valuable service. Getting the government involved to try and 'fix' the property market is one of the problems with the current price. Preventing investment properties, or limiting people to 1 would be a massive problem. I'd be happy if the government moved away from the property market completely (No First home owner grant, no negative gearing etc).


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