Inflation

[sptrawler]

But housing adds very little ongoing employment, as opposed to industrial investment, once it is built it supplies very little employment, but it has had a huge amount of stimulus.
Anyway it is what it is, a huge and ever growing gap between the haves and the have nots, which in turn leads to a very divided population.
It will just end up like most other countries in the world, which IMO is very sad.
But that's life.

What differentiates a great Government, from a Government which is just full of people who really don't want a real job, is one which actually makes changes to fit with the times.
The economy is dynamic as China is finding out, it wasn't long ago they had a one child policy, now 30 years later it isn't fit for purpose and has ended up with unintended consequence. They are now paying people to have children.

The same in Australia, rolling out the same old taxes and and policies, for a changing economy, isn't going to work, politicians are way too focused on the next election, rather than the next phase in Australia's journey.

Now the only blue chip investment in Australia is property, which is strange, when we have so much free space and such a small population. It tells you the market is being manipulated, which tells us that the Government should be doing something about it.

Shelter is a basic need and when a country like Australia, has shelter as an unaffordable commodity, something is seriously wrong.
The countries of the world we smugly look down upon, due to their terrible living conditions, we are fast becoming.
This situation wasn't unintended, it is actively encouraged.

Just as a footnote to the above, I was out for the weekly catchup with the mates and my best mate was telling me his son and DIL are are in the hole for over $2m on investment properties, I said I wish them well and the way things are going they should double their money.

I wouldn't do it, but this is what the younger generation are obviously seeing a s a sure bet, maybe I'm just too old fashioned and risk averse.
But if it turns to $hit no doubt it will be my fault.

 

[farmerge]

Just as a footnote to the above, I was out for the weekly catchup with the mates and my best mate was telling me his son and DIL are are in the hole for over $2m on investment properties, I said I wish them well and the way things are going they should double their money.

I wouldn't do it, but this is what the younger generation are obviously seeing a s a sure bet, maybe I'm just too old fashioned and risk averse.
But if it turns to $hit no doubt it will be my fault.

A different era and outlook on money management.

 

[Value Collector]

But housing adds very little ongoing employment, as opposed to industrial investment, once it is built it supplies very little employment, but it has had a huge amount of stimulus.
Anyway it is what it is, a huge and ever growing gap between the haves and the have nots, which in turn leads to a very divided population.
It will just end up like most other countries in the world, which IMO is very sad.
But that's life.

What differentiates a great Government, from a Government which is just full of people who really don't want a real job, is one which actually makes changes to fit with the times.
The economy is dynamic as China is finding out, it wasn't long ago they had a one child policy, now 30 years later it isn't fit for purpose and has ended up with unintended consequence. They are now paying people to have children.

The same in Australia, rolling out the same old taxes and and policies, for a changing economy, isn't going to work, politicians are way too focused on the next election, rather than the next phase in Australia's journey.

Now the only blue chip investment in Australia is property, which is strange, when we have so much free space and such a small population. It tells you the market is being manipulated, which tells us that the Government should be doing something about it.

Shelter is a basic need and when a country like Australia, has shelter as an unaffordable commodity, something is seriously wrong.
The countries of the world we smugly look down upon, due to their terrible living conditions, we are fast becoming.
This situation wasn't unintended, it is actively encouraged.

As I said, I don’t negative gear myself so it’s not something I want to spend much time defending, but I don’t have a problem with it.

The affordability problem in Australia just comes down to the fact our population growth is outpacing the construction of new dwellings, and I don’t think getting rid of investors will help that.

Also, we have lots of land in Australia, but that doesn’t help when we all want to live in a handful of tight cities.

 

[divs4ever]

But housing adds very little ongoing employment,

some of the houses i have 'hand-over cleans ' did and i hear sometimes of issues undiscovered in the first 18 months of the proud buyers moving in

but heck we could always step up the quality of tradies and laborers to fix that , and of course the 'Reno' fad still has sting in it's tail

but in reality housing/accommodation construction/repairs shouldn't be a mainstay of a healthy economy ( nor should be consumer spending ) but here we are after decades of governments policy

BTW i hold WES , BWP SUL , so this debacle doesn't irritate as much as it did when i was younger ( and had no stocks )

 

[divs4ever]

A different era and outlook on money management.

no there were some doing that even in the '70s , as i suspect there were day-traders even back then but fewer and less publicized

one school-mate left school to become an electrician and formed a loose cooperative which built houses and units for sale/or rent

now he may have considered himself rather dumb but he had $1 million in the bank way before the rest of his classmates ( many of whom were still at university getting advanced degrees )

 

[Belli]

But remember that there is no CPI indexation either, which is common on other jurisdictions.
A fair system would be full capital gain tax, or loss , after indexation on a CPI ..but current CPI is such a rort that even that would be pure robbery .
That could also bring some incentives for government to control inflation. Whereas currently, the more inflation, the higher the taxation...

On issue is that once you provide the population with a tax concession, it is very unpopular if it there is a threat to remove the concession. The Low and Middle Income Tax offset is a case in point. It was to apply for only three years but there was a few howls once it was recognised it was to lapse; Your tax will increase this year sort of thing.

There is always some tension between Treasury and politicians which we generally are not aware of. People in Treasury are not dumb by any means. Some very bright people work there and are always looking at the balance between forgone revenue (tax expenditures) and political agendas.

I can only hope the concept of imputation of rent on one's PPOR is no longer bubbling away on the back burner and has been taken off the stove entirely.

As for the CG discount, it doesn't need to be removed but the holding period can be extended to say 5 or 10 years instead of 12 months.

They probably model stuff like this but we don't know about it.

 

[qldfrog]

On issue is that once you provide the population with a tax concession, it is very unpopular if it there is a threat to remove the concession. The Low and Middle Income Tax offset is a case in point. It was to apply for only three years but there was a few howls once it was recognised it was to lapse; Your tax will increase this year sort of thing.

There is always some tension between Treasury and politicians which we generally are not aware of. People in Treasury are not dumb by any means. Some very bright people work there and are always looking at the balance between forgone revenue (tax expenditures) and political agendas.

I can only hope the concept of imputation of rent on one's PPOR is no longer bubbling away on the back burner and has been taken off the stove entirely.

As for the CG discount, it doesn't need to be removed but the holding period can be extended to say 5 or 10 years instead of 12 months.

They probably model stuff like this but we don't know about it.

I honestly would prefer indexation..your life and investments should not be managed mostly by ATO rulings..which it is now a case where people delay selling assets to gain the 1y threshold ...
Society adapts as we know, but that adaptation means:
* Stop working for me..in jobs which have always been export dollars for the country,
* favouring RE deals vs work,
* Betting against business building and
long time investment
and ensuring governments WANT inflation as in self interest

 

[Value Collector]

Just as a footnote to the above, I was out for the weekly catchup with the mates and my best mate was telling me his son and DIL are are in the hole for over $2m on investment properties, I said I wish them well and the way things are going they should double their money.

I wouldn't do it, but this is what the younger generation are obviously seeing a s a sure bet, maybe I'm just too old fashioned and risk averse.
But if it turns to $hit no doubt it will be my fault.

I guess it comes down to how much equity they have, and whether their portfolio is producing positive or negative cashflow.

Eg, if they owned $10M in property with $2M in debt and its producing positive income it’s probably fine.

But,

If they only have $2.2M in property with $2 M debt and its Negatively geared it’s not very smart.

 

[sptrawler]

It is going to get interesting IMO.
It is all becoming a bit weird, people pay crazy money for a house, then want crazy rents to fund it, something has to give.

Krissy tried to negotiate down a rent increase. She was taken aback by the response

The eastern suburbs firefighter and sole parent was told her rent would jump $300 a week. She made a counter-offer, then received an unexpected reply.

www.smh.com.au

From the article

 

[Value Collector]

As for the CG discount, it doesn't need to be removed but the holding period can be extended to say 5 or 10 years instead of 12 months.

12 months makes sense because that one complete earnings cycle for most businesses.

Eg. Within 12 months most businesses have earned income, paid their tax and the remaining retained income has increased the companies net equity and there fore its valuation.

Eg, if Woolies retained 70cents after tax earnings this year, and that created a capital gain for the share, why should we have to hold for 5 years to avoid that 70cents being double taxed.

————————

The hope is that the 70cents of after tax income Woolies retains actually gets invested well and produces a $1.40 in capital gain.

If it does that the 50% discount means we don’t get taxed on the first half of the gain which was just due to retained earnings but we pay tax on the second have which was real growth.

 

[Belli]

@SirRumpole, you may be interested in this. I recalled reading it a while ago but took some time to find it. Bear in mind it is from a left-leaning think tank.

Peter Costello's five most 'profligate' decisions as treasurer cost the budget $56bn a year - The Australia Institute

According to the International Monetary Fund, the Howard/Costello government was the most profligate in Australia for the last 50 years. Indeed, while the mining boom was gathering pace they cut taxes so far and so fast that they forced the Reserve Bank of Australia to rapidly increase interest...

australiainstitute.org.au

 

[mullokintyre]

No comparison between the US and Aus taxation systems. 220 million population vs 23 million. They can have lower taxes because they have more taxpayers.

No sensible person would compare Australian and US taxation systems.
Unlike here in OZ, the US states are allowed to raise income taxes as well as sale s taxes, and they vary enormously from state to state.
The states can even create a wealth tax as California is planning to, and there is nothing in their constitution to prevent it.
Mick

 

[qldfrog]

No sensible person would compare Australian and US taxation systems.
Unlike here in OZ, the US states are allowed to raise income taxes as well as sale s taxes, and they vary enormously from state to state.
The states can even create a wealth tax as California is planning to, and there is nothing in their constitution to prevent it.
Mick

So I am not sensible ..I still believe any country irrespective of it size should have a similar low level of Taxation.
And yes you can be too small to have a space program or a nuclear sub fleet.
Or afford 5 philharmonic orchestras...
Live and spend according to your income..

 

[sptrawler]

Oh well at least the media are getting onboard, with the underlying problem.

No one can escape this housing crisis — it's coming for homeowners too

If we drop the antagonism between younger Australians and Boomers, will it help to fixing our housing crisis, asks Gareth Hutchens.

www.abc.net.au

 

[over9k]

Now the only blue chip investment in Australia is property, which is strange, when we have so much free space and such a small population. It tells you the market is being manipulated, which tells us that the Government should be doing something about it.

But the government is the one doing the manipulation trawler.

I wouldn't do it, but this is what the younger generation are obviously seeing a s a sure bet, maybe I'm just too old fashioned and risk averse.

If I had known that the powers (scumbags) that be were going to do and continue to do what they have I would have bombed out of school at 16 to work at mcdonalds (or anywhere really) and just saved up a deposit, bought a house, rented it out immediately, kept saving, bought another house, rented it out immediately, kept saving, bought another house, rented it out immediately...

They probably model stuff like this but we don't know about it.

Doesn't matter if they do belli, whatever the good idea might be, it's politically impossible, so no matter how obvious a solution it is if the people in power are benefiting from the problem then they will perpetuate it.

 

[over9k]

Meanwhile, queensland announces a $30k first home buyer's grant, thereby ensuring that all properties below the $750k mark will appreciate by $30k literally overnight.

First home owner grant - Queensland Revenue Office

The first home owner grant is a state government initiative to help you buy or build your first home.

qro.qld.gov.au

 

[divs4ever]

Meanwhile, queensland announces a $30k first home buyer's grant, thereby ensuring that all properties below the $750k mark will appreciate by $30k literally overnight.

First home owner grant - Queensland Revenue Office

The first home owner grant is a state government initiative to help you buy or build your first home.

qro.qld.gov.au

why not , got to get more ( potential ) victims of crime into developing slums

it's all pretty standard bait up here ,start a new yuppie development just across the creek ( or street ) from a well-entrenched hell-hole

 

[qldfrog]

Meanwhile, queensland announces a $30k first home buyer's grant, thereby ensuring that all properties below the $750k mark will appreciate by $30k literally overnight.

First home owner grant - Queensland Revenue Office

The first home owner grant is a state government initiative to help you buy or build your first home.

qro.qld.gov.au

And let's not forget another 30k a pop of extra taxes....... Most probably on debt.. and so interests ....
So the actual need for inflation ...

 

[qldfrog]

Let's be cynical: the $30k for a few houses might sustain the RE market further and so be a good ROI considering the amount in stamp duty and taxes..sorry fees that the state government cashes on any property transfer .
Not to mention the CGT by the federal government.
This could even be a cash positive deal

 

[farmerge]

Let's be cynical: the $30k for a few houses might sustain the RE market further and so be a good ROI considering the amount in stamp duty and taxes..sorry fees that the state government cashes on any property transfer .
Not to mention the CGT by the federal government.
This could even be a cash positive deal

Oh Mr Frog you are being so cynical.