Has the halving of capital gains tax benefited the economy?

[sydboy007]

There are plenty out there holding for the yield depending on the location. I can develop 3 townhouses and keep one at low cost for yield, or do the research and get in early on a future mining towns . Its not a one strategy suits every area.

If I have access to cheap money I can buy shares or business equipment without worrying about selling for cap gains, perhaps I want to wait and buy the houses next door as well. It depends how far ahead you look or if the figures and future profitability no longer make sense to hold.
I was getting at the fact that people seem to think everyone buys and holds property in a vanilla fashion and thats what you are limited. That and the attitude you cant make money at this stage of the cycle.
I think there are just some people peed off property near the center of town doesnt crash like shares.

I will agree that the system is setup in favor of quicker sales on the basis of grabbing more tax on transactions.

I knew a guy who bought a property in the west of Sydney with the intention of building townhouses on it.

After the experience he had with getting the plans through council and the delays and costs involved, he's given up on doing it again. He made money, but he was lucky to have a decent capital buffer to help with the holding costs.

If there is money to be made in property, there's only a few areas left, nad I would think that the higher the yield on the property, the lower the chance of capital gains, and the bigger the erosion of CPI when you do come to sell.

 

[moXJO]

If there is money to be made in property, there's only a few areas left, nad I would think that the higher the yield on the property, the lower the chance of capital gains, and the bigger the erosion of CPI when you do come to sell.

You are way off the mark, is this just more off the top of your head brain fart kind of figures.

Keep thinking that way though. Its not for everyone.

 

[FlyingFox]

There are plenty out there holding for the yield depending on the location. I can develop 3 townhouses and keep one at low cost for yield, or do the research and get in early on a future mining towns . Its not a one strategy suits every area.

If I have access to cheap money I can buy shares or business equipment without worrying about selling for cap gains, perhaps I want to wait and buy the houses next door as well. It depends how far ahead you look or if the figures and future profitability no longer make sense to hold.
I was getting at the fact that people seem to think everyone buys and holds property in a vanilla fashion and thats what you are limited. That and the attitude you cant make money at this stage of the cycle.
I think there are just some people peed off property near the center of town doesnt crash like shares.

I will agree that the system is setup in favor of quicker sales on the basis of grabbing more tax on transactions.

If you bought before the peak, good on you and you will be on a nice yield. A family member developed a commercial prop ~ 2001 and is getting ~25% yield and 600% CG. This wasn't in oz but you get the picture. If they wanted to do that today their yield would be ~7-10% and very little chance of CG.

If you think developing townhouses is a risk free investment, good for you. If I can't sell one out of the three, I will be in trouble. With props selling below replacement costs, I for one am not willing to take the risk. If your a seasoned developer or builder than that's different. Mining towns I agree with but again a more risky proposition.

Having access to cheap money should be secondary to the discussion about property investments. You will only have access to cheap money if you pay of the mortgage or get cap gains. If I have the money, why don't I just invest it in shares. Why do I need to buy an IP?

Buying and holding is the most common investment strategy hence the most discussed one. The other case is for trading and not necessarily investing. If you want to trade or develop properties, then we can have a discussion on that basis. If you are buying an IP now with yields ~ 4% (and negatively geared?) on the basis of cap gains then there maybe better investments.

Quicker sales with big taxes means big increase in prices => bubble. Not an effective use of money.

You are way off the mark, is this just more off the top of your head brain fart kind of figures.

Keep thinking that way though. Its not for everyone.

Syd just provided anecdotal evidence (actually more than you did in that he named an actual place). You don't have to agree with it but don't insult him on that basis.

 

[moXJO]

Have had 3 large posts wipe on me so will keep it short. No skin in the game usually means talking outa ones ass when it comes to investing. Sorry to be harsh damn post wipe gave me the ****z

 

[Julia]

moXJO, let Joe know about your post being wiped. It's an apparent peculiarity only a few of us have experienced. It has only ever happened to me when doing an especially long post.
Incredibly irritating.

 

[sydboy007]

To shift away from the focus on property, wouldn't it be better if the halving of the capital gains tax was only for:

New housing stock
New shares / IPOs
Any new asset

I don't see how the halving benefits "investment" when it's available for existing assets. it doesn't benefit a company on their current shares, but it would if people could gain it on new purchases. Same for IPs as it would encourage the building of new properties.

The current system encourages speculation and the pursuit of converting income into capital gains.

 

[drsmith]

moXJO, let Joe know about your post being wiped. It's an apparent peculiarity only a few of us have experienced. It has only ever happened to me when doing an especially long post.
Incredibly irritating.

I don't recall having this happen here, but on another forum it did.

I quickly learned with longer posts that it was a good idea to save them to a text editor before hitting the reply button, just in case.