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Australian Federal Election - 2019

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Why would you negatively gear a property? You are entering into an investment with negative cash flow....so you are losing money each year. The short-term reason is to pay less tax right? Correct, however there is a caveat on this, you are entering into this arrangement with the EXPECTATION that you will sell at a sizeable profit in the future.....

Now, the new rules will dictate you can only receive your tax benefits on NEW builds. What happens when you go to sell in the future? That buyer will not be able to negatively gear, as the property is not new anymore! This will have an impact on the valuation....so you will overpay for the new build, as you compete with other investors and cover the sizeable marketing costs of the developer & commission payment to the salesman, but then when you sell 10 years later, your market will now be restricted to owner-occupiers. Furthermore, if you have purchased in an outer-suburban housing estate, you may well be selling around the same time as 1,000 other "investors", in the same area, with the same type of house, in a poor location.

Will the numbers stack up?
 
sptrawler said:
Junior I doubt the policy will last 3 years, let alone 10, just my thoughts.
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From memory, NG was removed by a Labor govt before, the result was a shortage of rental accommodation in the cities causing a steep rise in rents.

Given the out of control housing problems caused by mass immigration over the past ten years and the likely 500,000 older people that will come in the next three years with the new Labor policy, changing the rental rules could be very unpopular.

I have always thought that a simple rule of "all investment properties must have a minimum of 10% ? unencumbered deposit at time of purchase" would stop a lot of the speculation and also lessen the amount of the tax deductions made.

Should any government wish to reduce the NG deductions they could simply change the % amount of the deposit.
 
Junior said:
Why would you negatively gear a property? You are entering into an investment with negative cash flow....so you are losing money each year. The short-term reason is to pay less tax right? Correct, however there is a caveat on this, you are entering into this arrangement with the EXPECTATION that you will sell at a sizeable profit in the future.....

Now, the new rules will dictate you can only receive your tax benefits on NEW builds. What happens when you go to sell in the future? That buyer will not be able to negatively gear, as the property is not new anymore! This will have an impact on the valuation....so you will overpay for the new build, as you compete with other investors and cover the sizeable marketing costs of the developer & commission payment to the salesman, but then when you sell 10 years later, your market will now be restricted to owner-occupiers. Furthermore, if you have purchased in an outer-suburban housing estate, you may well be selling around the same time as 1,000 other "investors", in the same area, with the same type of house, in a poor location.

Will the numbers stack up?
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The whole object of this policy in my view is to gradually replace investors in the housing market with owner occupiers, which is the way it should be.

People who have had to rent all their lives and then get to retirement age without owning their own home and still having to pay rent will be a massive burden on the social security system.

Home ownership is the bedrock of retirement policy, investors are distorting the housing market and the retirement market in the long term.
 
I completely agree with you Rumpy, I just think as usual, the implementation will be where the intent fails.
 
Same here. I don't like negative gearing...but these carve-outs for new builds will cause a new set of problems. There are other ways to encourage new housing.

A better option in my view is to kill NG and grandfather existing arrangements, OR allow 1 property NG per individual, OR have a $$ Cap on tax deductions from property.
 
Junior said:
A better option in my view is to kill NG and grandfather existing arrangements, OR allow 1 property NG per individual, OR have a $$ Cap on tax deductions from property.
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NG will be grandfathered, so that's one down.
Capping the number of negatively geared properties just limits potential for new builds, so not sure that's smart.
Capping tax deductions would distort markets due to housing of different size, value and quality at different locations.
 
Negative gearing is sold as the holy grail for investing, except its not, plenty of property sold on this false basis at over inflated prices to property lemming punters.

I know dozens of people who have done just that and are now under water holding a loss making investment that will be break even if that after 20 years.

Professionals know an investment has to stand on its own two legs with the required return long before NG is considered.

If anything it could help keep punters out of the market for their own good.
 
I think it would be difficult to come up with a worse proposal than Labor are suggesting.
It is clumsiness at its best.IMO
Like Ive said the intent is good, the implementation will be a mess, as usual.
Exactly the same as the franking credit changes, the intent is good, but when it creates a situation that someone on welfare earns more than some who self funds, it has to create a new problem.
Just my opinion, it will all be very interesting.
 
Read an analysis of the Franking credits in Your Life Choices . This is a website that covers issues around retirement etc.

Very strong position taken by Kaye Fallick who runs the business. Certainly xissed off many of her readers.

4th May 2019
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Comment: Franking credits and who is really affected
Author: Kaye Fallick
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Ever given a child a lolly and tried to take it back?

Outrage, right?

And the same goes for retirees and cash payments for franking credits. We’ve seen a lot of outrage and disbelief at Labor’s proposed reversal of this cash payment.

So what is the truth about changes to franking credits and who will bear the brunt?

First up, not all retirees are benefitting from cash payments for excess franking credits. In fact, the Parliamentary Budget Office confirms that 92 per cent of Australians will be unaffected by Labor’s proposed changes to franking credits. This leaves eight per cent who are likely to be affected, and with all pensioners exempt (along with not-for-profit institutions and self-managed super funds with a pension recipient), this leaves a very tiny cohort whose income will be curtailed. Which is surprising given the hue and cry we have heard about this proposed change.

Those most likely to be affected are retirees who do not receive a full- or part-Age Pension (about 30 per cent of Australia’s 4.5 million retirees), those who describe themselves as ‘self-funded retirees’. But are they really ‘self-funded’? Extremely generous tax concessions apply to their superannuation and mean they pay no tax on the earnings or income derived from their super once it is accessed – for as long as they live.

The real question is, who else in Australia gets a free kick like this?

In terms of GDP, such superannuation concessions cost Australians $55 billion per year, which is higher than the current cost of the Age Pension at $48 billion per year.


So if tax concessions, paid for by revenue foregone by the Australian Tax Office (ATO), allow retirees to have a higher income, such retirees cannot accurately be described as ‘self-funded’. For the sake of grammatical accuracy, such retirees are actually non-pensioners as, like age pensioners, they too rely on government concessions and handouts in retirement – just a different type.

Does this mean Labor’s policy to remove franking credits from non-pensioners should be supported?

Yes, it should – for two reasons of equal importance: fiscal responsibility and intergenerational equity.
https://www.yourlifechoices.com.au/...nitor&utm_term=labors franking credits policy
 
Another “expert” who fails to mention those not on superannuation who will be affected.

The good news though is there aren’t many of them so no need to worry.

Just like Aboriginals, gays, any religion other than Christianity and plenty of other groups are small minorities which presumably will also be overlooked if necessary in order to benefit the majority.

Strangely I have a feeling that won’t occur... (and it shouldn’t occur but we shouldn’t be stuffing up early retirees etc either).
 
My understanding of NG was that it was originally brought in to create more housing as there was a shortage. Applying it to anything other than new builds does not achieve this purpose. However at the rate the skyscrapers and other apartment developments are going up around my area do we really need this at the moment? A lot of these apartments are sitting empty.
 
Miss Hale said:
However at the rate the skyscrapers and other apartment developments are going up around my area do we really need this at the moment? A lot of these apartments are sitting empty.
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I think the issue is that most people want a house and of those who do want an apartment they want 3 bedrooms and low density not 1 bedroom in a high rise building.

A lot of the apartments which have been built really only appeal to young singles or for renting out to tourists, they’re not what most people want as their actual home.

Exceptions of course.
 
A comment I saw elsewhere that’s worth repeating.

FA Cup final, A League grand final and the Eurovision Song Contest are all on this weekend in addition to the Australian election.

The difference is that whoever wins the FA Cup, A League and the Eurovision will still be the winner a year from now and will always have won the 2019 event. There won’t be a squabble over the trophy where someone else who didn’t win takes it off the actual winner.

So if you’ve only got time for one then pick sports or music, at least whoever wins those will have actually won.
 
I just hope the outcomes are what people expect and not just a further widening of the rich and poor chasm.
Australians enjoy one of the best living standards in the World, it is a Country where anyone who gets off their ar$e can get ahead, I hope that doesnt change.
 
Smurf1976 said:
I think the issue is that most people want a house and of those who do want an apartment they want 3 bedrooms and low density not 1 bedroom in a high rise building.

A lot of the apartments which have been built really only appeal to young singles or for renting out to tourists, they’re not what most people want as their actual home.

Exceptions of course.
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I just look at them and wonder how long before they become like the old housing commission developments, neglected and run down. They are all the same boring pokey dog boxes yet they promote them like they are some kind of prestigious status symbol. You couldn't pay me to live in one of them.
 
Miss Hale said:
I just look at them and wonder how long before they become like the old housing commission developments, neglected and run down. They are all the same boring pokey dog boxes yet they promote them like they are some kind of prestigious status symbol. You couldn't pay me to live in one of them.
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The suburbs are just dormitorys these days to house the slaves between work shifts.

Very little parkland or places for kids to play except on the streets, just rows of houses piled on top of each other.
 
Smurf1976 said:
Another “expert” who fails to mention those not on superannuation who will be affected.

The good news though is there aren’t many of them so no need to worry.

Just like Aboriginals, gays, any religion other than Christianity and plenty of other groups are small minorities which presumably will also be overlooked if necessary in order to benefit the majority.

Strangely I have a feeling that won’t occur... (and it shouldn’t occur but we shouldn’t be stuffing up early retirees etc either).
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Being outraged at discrimination, only works when you have the virtue signalers in your corner.
 
SirRumpole said:
The suburbs are just dormitorys these days to house the slaves between work shifts.

Very little parkland or places for kids to play except on the streets, just rows of houses piled on top of each other.
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I think you are going to see a huge increase in that trend.
 
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