The future of Australian property prices

[sptrawler]

Ann, the real question is how much leverage into property are SMSF in?

If the figure is large, this would be another attributing factor to why property increased so much in the last 10 years. If this pool dries up, yes we could expect property to fall further.

From memory i don't think there is a lot of exposure by SMSF, the rules were only relaxed during Gillards reign, so I don't think it had time to get a lot of traction.
I could be wrong, but i'm sure I read it was a small number somewhere.

 

[sptrawler]

Even more interesting:
"
The ATO's next focus would be on rental income and deductions, with auditors having now completed over 300 audits on rental property claims and found errors in almost nine out of 10 returns reviewed, he said.

"We're seeing incorrect interest claims for the entire investment loan where it has been refinanced for private purposes, incorrect classification of capital works as repairs and maintenance, and taxpayers not apportioning deductions for holiday homes when they are not genuinely available for rent," Mr Jordan said.

"When you consider that rentals include over 2.1 million taxpayers claiming $47.4 billion in deductions, against $44.1 billion in reported income, you can get a sense of the potential revenue at risk."

https://www.abc.net.au/news/2019-03...-post-panama-papers/10899518?section=business

That is going to be a big can of worms, people I spoke to when I was working, who had rental property didn't have a clue as to the limitations.
They just claimed everything, against the rent, for the full year.
When in actual fact you can only claim against the period it was rented.
This will be even more pronounced, with airbnb style renting.

The ATO will have to employ more auditors.

 

[satanoperca]

And lets not forget all those AirBnB properties where the owners havn't declared the income and in some cases were dumb enough to claim the expenses and not the income.

I have a friend who has been quite happy AirBnB their property out for 3 years (they live in it), they are in the top tax bracket, when I suggested they should declare the rental as income I got the response, it is my home why should I. When I informed them that the ATO is now linked to the AirBnB database and they would have to pay >45% tax on the income, they said it wasn't worth it.

I will assume this would account for a large number of AirBnB properties

 

[sptrawler]

And lets not forget all those AirBnB properties where the owners havn't declared the income and in some cases were dumb enough to claim the expenses and not the income.

I have a friend who has been quite happy AirBnB their property out for 3 years (they live in it), they are in the top tax bracket, when I suggested they should declare the rental as income I got the response, it is my home why should I. When I informed them that the ATO is now linked to the AirBnB database and they would have to pay >45% tax on the income, they said it wasn't worth it.

I will assume this would account for a large number of AirBnB properties

Yes and when they go to sell their house, they will be subject to capital gains tax, if they have airbnb'd a room in their PPR.

 

[basilio]

The issue of expensive cladding risks in recent housing apartment constructions is still on the march.
This story expands on that topic and has a table showing the location of 500 plus housing developments around Melbourne currently being investigated for inflammable cladding.
If there is an average of 30 units per location that would be 15,000 plus owners with a big bill coming up.

Two towers, two fires - but both signed off by same engineering firm
Clay LucasMarch 14, 2019 — 10.47am

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The fire safety engineering firm found by a tribunal to be most to blame for a 2014 flammable cladding blaze in Docklands also signed off on Neo200, the Spencer Street apartment tower that caught alight in February.

Last month the Victorian Civil and Administrative Tribunal found that safety engineering company Thomas Nicolas, whose sole director is Con Nicholas, was responsible for the largest portion of the almost $6 million it will cost to reclad the Lacrosse apartment tower on Latrobe Street.

https://www.canberratimes.com.au/po...by-same-engineering-firm-20190312-p513np.html

 

[Humid]

The industry funds have been chasing the retirees from SMSF's for years, it is a really big sector and the industry funds want the money in their coffers, that is the driving force behind Labor's changes.
I would rather spend it, than give my money to someone else to look after, how many have lost their money through bad managers? FFS we just had a royal commission highlight it.
Now they want to legislate so someone else gets YOUR money, as I've already said the younger ones are going to lose out big time with all of the proposed changes coming up.
The problem is no one is thinking of the long term ramifications, of the changes, but that's the way it goes.

Would a bad fund manager be someone who suggested relying heavily on franking credits?

 

[sptrawler]

Would a bad fund manager be someone who suggested relying heavily on franking credits?

Not for the last 20 years.
Also the industry funds will still be relying heavily on them, it is just their mates are screwing over the little guy, for them.

 

[Smurf1976]

Would a bad fund manager be someone who suggested relying heavily on franking credits?

I would define a bad fund manager as anyone who is charging their clients fees for managing their funds but who has in practice simply tracked an index or other benchmark or, worse still, has under performed it.

 

[qldfrog]

A good fund manager? Easy
Fee should be only a percentage and maybe high one of the fund overperformance vs the index
Say will get half of the overperformance over the asx inc dividends over a period :quarteror year..
Easy to understand or implement
If you know one or some, tell me.
If there are none, it means simply no fund can be trusted to beat the indexes

 

[Bill M]

I would define a bad fund manager as anyone who is charging their clients fees for managing their funds but who has in practice simply tracked an index or other benchmark or, worse still, has under performed it.

If you know one or some, tell me.
If there are none, it means simply no fund can be trusted to beat the indexes

And this is the reason why a lot of people have a SMSF. You set it up with someone like Esuperfund and pay your $1300 a year all in no matter what your balance is. Then you can take out multiple Term Deposits and buy ETF's with low MER's and there is no skimming for ongoing "Admin" fees. Maybe those Industry Super Fund CEO's don't like the fact that it is very easy to do, really it is.

Why pay a .64% ongoing fee for the total of your super balance when you can do it yourself? Here is the difference in fees for a $500,000 Super Account

abc Super Company = $3,200

ESuperfund (or similar) = Just your yearly $1300 - $1500 fee no matter how big your balance is. Some people only want Term Deposits and ETF's. To me it sounds like these Big Wig CEO's are getting worried about something that has nothing to do with them. Why question how individual wants to run their own Super Fund?

 

[Bill M]

^^^Whoops, so sorry, for some reason I thought I was posting in the Super Cash Cow thread. I am off topic and if mods want to move or delete the above post please go ahead.^^^

 

[Zaxon]

And this is the reason why a lot of people have a SMSF. You set it up with someone like Esuperfund and pay your $1300 a year all in no matter what your balance is. Then you can take out multiple Term Deposits and buy ETF's with low MER's and there is no skimming for ongoing "Admin" fees.

They really should drop the requirement for having to spend $1300 for compliance. If you can do you own taxes for free, and comply with tax law, then you should be able to manage your own SMS for free, and comply with super law. That would open it up to far more people who really only want to do simple things like Term Deposits and ETFs.

 

[Junior]

And this is the reason why a lot of people have a SMSF. You set it up with someone like Esuperfund and pay your $1300 a year all in no matter what your balance is. Then you can take out multiple Term Deposits and buy ETF's with low MER's and there is no skimming for ongoing "Admin" fees. Maybe those Industry Super Fund CEO's don't like the fact that it is very easy to do, really it is.

Why pay a .64% ongoing fee for the total of your super balance when you can do it yourself? Here is the difference in fees for a $500,000 Super Account

abc Super Company = $3,200

ESuperfund (or similar) = Just your yearly $1300 - $1500 fee no matter how big your balance is. Some people only want Term Deposits and ETF's. To me it sounds like these Big Wig CEO's are getting worried about something that has nothing to do with them. Why question how individual wants to run their own Super Fund?

Hi Bill M, admin for an SMSF can be very time consuming, as I'm sure you know. Many retirees don't want the hassle.

Also, retail super funds are getting cheaper and cheaper. Many have a cap on the admin fee, which can be as low as $2,500 per annum....for larger balances this can start to make more sense than the burden of an SMSF. You have access to shares, TDs, ETFs. Don't have to do a tax return, get an audit etc. and can view all your reporting online.

 

[qldfrog]

Junior, you have a point but it is a given that people with higher balances will subsidise the ones with 10 or 20k when in a fund.
I am with sunsuper with low balance of 300k or so..minimum contribution as i do not trust gov now, even less in 10y+..
But i i not want to pay for surfer ads or getting below market returns on my cash options

 

[Humid]

Junior, you have a point but it is a given that people with higher balances will subsidise the ones with 10 or 20k when in a fund.
I am with sunsuper with low balance of 300k or so..minimum contribution as i do not trust gov now, even less in 10y+..
But i i not want to pay for surfer ads or getting below market returns on my cash options

I payed 80k in tax last year.......am I subsidising franking credits?

 

[Junior]

Junior, you have a point but it is a given that people with higher balances will subsidise the ones with 10 or 20k when in a fund.
I am with sunsuper with low balance of 300k or so..minimum contribution as i do not trust gov now, even less in 10y+..
But i i not want to pay for surfer ads or getting below market returns on my cash options

This is true of most Industry funds, where fees are a flat percentage of your balance, but retail (bank) funds often have a cap on the admin fee, and you can choose to invest in direct shares, TDs etc. where you don't pay any fund manager fees.

 

[sptrawler]

I payed 80k in tax last year.......am I subsidising franking credits?

No, but you are probably paying for four on the dole, while we import 457 cleaners for the camps you live in.

 

[Zaxon]

you can choose to invest in direct shares, TDs etc. where you don't pay any fund manager fees.

My super allows for direct share buying, but the brokerage is very high, far higher than what I'm charged outside of super. You'd think that a large super fund would have the leverage to negotiate better brokerage rates? No. Their rates are more expensive.

In addition, they charge you a monthly fee just for having the direct share facility, which isn't charged if you don't have it. So if you add up all those expenses, and then compare them to the fees for holding one of their funds, it can be difficult to work out how the expenses of these options really line up.

 

[Humid]

Nah

No, but you are probably paying for four on the dole, while we import 457 cleaners for the camps you live in.

Nah mate kiwis

 

[Junior]

My super allows for direct share buying, but the brokerage is very high, far higher than what I'm charged outside of super. You'd think that a large super fund would have the leverage to negotiate better brokerage rates? No. Their rates are more expensive.

In addition, they charge you a monthly fee just for having the direct share facility, which isn't charged if you don't have it. So if you add up all those expenses, and then compare them to the fees for holding one of their funds, it can be difficult to work out how the expenses of these options really line up.

I do these comparisons for work. You're spot-on, they make it very difficult to compare like-for-like, but it can be done. Brokerage rates through most retail funds are around $30 or 0.10% per trade.