Property Boom over

[Ghostwriter]

Am doing the exact same thing, but in NSW, where the duty is about $4k in my case for "investor".

I am getting around this by telling the bank the purpose of buying the property is to live in (which it ultimately is); and will make sure rates bills and the like are sent to the address (and get the tenants to forward to me). Possilby sneaky but fk em.

I also want the best of both worlds of course, as I'm going to rent out / negative gear it, which is through the fed tax sytem and has no connection to the states (in theory!).

you may want to look at the tax implications, as you may save >$8k in income tax if you rent it out rather than lock it up. Will depend on your own circumstances.

Your tenants are getting a rental discount for this favour?

 

[acker]

Was at an mortgagee auction for a CBD apartment yesterday - estimated to go for $620K, with a ridiculous $8Kp.a. in body corporate alone.

Barely room to breathe given the number of people in attendance, sold for $756K.

Wait for a bit more evidence of a trend rather than basing predictions on auction clearing rates for one arbritrary weekend.

I agree thier are more people on this board hoping they go down in hope of a big sub-prime crisis ala U.S.A than there are actualy following the market in Australia, in particular Australia minus Sydney.

By the way Guido that wasn't you hobbling around with a brace on your knee at the auction was it ?

 

[Deej]

So who will buy property? Wh will build property? Where will the increasing population live? And given the small supply, how will people afford rents?

Didn't think that one through, did you. And it's not as if you haven't had this very thing explained to you before. Maybe you're slow?

I dont need anyone to 'explain' to me the way this system works, I know exactly how it works. I believe I have a different opinion of what objectives are important in life, as a society, to what your typical person living in a capitalist country might think. The key difference is that I care about the growing class of of people that are being left behind, whereas most others dont give a stuff about anyone but themselves.

I believe the abolishment of negative gearing is a long term strategy that couldn't be judged on 1-2 years effectiveness.

I might be wrong about how to go about adjusting the balance of power from banks and real estate agents and investment property owners, but that doesn't mean i should be ridiculed for wanting long term strategies that promote a better 'spread' of wealth in the world. And before anyone suggests an agenda, I am not poor, I am most certainly capable financially of building myself a property portfolio, renting them out, and jacking up rents when the repayments rise due to interest rates like every other greedy prick in the game does. My motivation stems from concern for people on lesser incomes who are most at risk of exploitation.

 

[Tim the Toolman]

I would have agreed with you when I was 18 and not any wiser but with what I've seen in public housing over the past 20 years, if you can't help yourself you don't deserve it.

I have seen what lives in public housing and the poor children don't stand a chance with the way their parents live. The more you hand to them on a platter, the more they expect not to get off their arse and work for it.

If you want a socialist state go to China where you'll see that capitalism still prevails regardless of what the Government tries to do.

 

[Deej]

I would have agreed with you when I was 18 and not any wiser but with what I've seen in public housing over the past 20 years, if you can't help yourself you don't deserve it.

I have seen what lives in public housing and the poor children don't stand a chance with the way their parents live. The more you hand to them on a platter, the more they expect not to get off their arse and work for it.

If you want a socialist state go to China where you'll see that capitalism still prevails regardless of what the Government tries to do.

I admit not all my motivation is out of concern for their quality of life. I want my kids to live in a safe country and if the classes you have mentioned arent helped then it can lead to more crime and danger on the streets. The US is already ruined in that way, there are suburbs you just do not go to at night (and some at day too), I know it's impossible to change idiots but it's not healthy for our country for us to just ignore them either.

 

[Traces of Nuts]

Your tenants are getting a rental discount for this favour?

No mate fk that, they'll pay whatever the market dictates (or slightly less, as I'm not one of those dick head landlords who leaves a place empty for a month to get an extra 10 bucks).

At the moment they are getting a bargain at roughly 4% of the property's value. My interest bill is double that at about 8%.

But in 7 years the joint will be worth double.

 

[bunsen burner]

I dont need anyone to 'explain' to me the way this system works,

Obviously you do.

Myself and ten other people have explained it nice and easily, yet you still don't get it? Challenged?

I know exactly how it works.

No really, you don't.

I believe I have a different opinion of what objectives are important in life, as a society, to what your typical person living in a capitalist country might think.

Completely irrelevant.

The key difference is that I care about the growing class of of people that are being left behind, whereas most others dont give a stuff about anyone but themselves.

So why would you advocate a policy that would cause rents to sky rocket?

I believe the abolishment of negative gearing is a long term strategy that couldn't be judged on 1-2 years effectiveness.

Who's going to build the houses? Has little to do with the short term.

No inducement for investors to invest in property = no houses getting built & expanding population = shortage of property = increase in rents AND property prices.

I can't fathom how you can't comprehend that? No ifs, or buts, it really is that simple.

I might be wrong about how to go about adjusting the balance of power from banks and real estate agents and investment property owners, but that doesn't mean i should be ridiculed for wanting long term strategies that promote a better 'spread' of wealth in the world.

Anyone who comes up with a theory that is clearly unsustainable and then still preaches that theory after been shown in no uncertain terms that it is unsustainable should be ridiculed.

And before anyone suggests an agenda, I am not poor,

Intellectually you are homeless.

 

[Chief]

Abolishing negative gearing will put a flood of houses on the market. House prices go down in short term. Then rentals will increase and in 2-5 years you'll get massive rental shortages. Rent will have to go up for people to build new flats/houses. Renters will be paying mortgage-like rents.

It is pretty basic stuff Deej, whatever your personal goals are.

 

[Deej]

Abolishing negative gearing will put a flood of houses on the market. House prices go down in short term. Then rentals will increase and in 2-5 years you'll get massive rental shortages. Rent will have to go up for people to build new flats/houses. Renters will be paying mortgage-like rents.

It is pretty basic stuff Deej, whatever your personal goals are.

Not if govt build enough commission houses and keep rents for them low.

 

[morgoth]

Not if govt build enough commission houses and keep rents for them low.

Just what everyone aspires to, govt owned properties.

 

[bunsen burner]

Not if govt build enough commission houses and keep rents for them low.

Bout time you snapped out of it. Come on, enough is enough. Time to get with the program.

 

[deeman12]

How are we all.

If any of you predicted interest rates going up why didn't you sell while rates were low, rent for a few months and buy when the interest rates went up. Wouldn't you make yourself a huge profit like that?

 

[bunsen burner]

How are we all.

If any of you predicted interest rates going up why didn't you sell while rates were low, rent for a few months and buy when the interest rates went up. Wouldn't you make yourself a huge profit like that?

Do you have a point?

 

[Dan26]

Here's my thoughts, I think the govt should make it a squillion times harder for investment properties to be viable for people renting them out. They should make a special tax ruling for people buying houses or units and renting them out, they can't be negatively geared and any capital gains should be taxed at 95%. Make it near on impossible for people to make money off them. I think property is a cheat's way of making money.

So, what would I do then? I currently have 2 negatively geared investment properties.

If what you were saying came to fruition, I would have never bothered to enter the market. I'd have to sell both investment properties because the current tax benefits I get (which you would cut) are essential for me to make money. I simply wouldn't be able to live without the tax beneifts. I can currently get by by losing money each moth via the negative gearing because I can get a shit load of it back after June 30.

How would it be fair for me to sell both houses, when I entered the market knowing that the tax benefits were available?

If negative gearing was abolished, it should only apply to people who buy properties from the time the new legislation is passed. For people who already have such properties (like me), they should still be able to reap the tax benefits until the house is sold, because they entered the property market because of the benefits of negative gearing, and if there were no benefits, wouldn't have entered it.

It would cause thousands of people to sell their investment properties.

I think the Hawke Labor Government temporarily abolished negative gearing tax benefits in the mid 80's and it caused such an uproar that the benefts were brought back in.

I don't think any Governement would touch it. They better not.

It's interesting to note that in the United States, you can claim the interest you pay on your mortage on the house you are LIVING in. Your actual residence.

 

[Karl Pilkington]

Believe it or not, there are a lot of people who prefer to rent rather than to buy a house. The main reason is because the rent is cheaper than paying the monthly mortgage repayments. Some people also simply can't afford a property and renting is the only way they can afford a roof over their heads.
If the government does what you suggest then there will effectively be no rental properties on the market and these people will be forced to live a lifestyle they don't want to and pay more for a roof over their heads (if they can't afford a house then they would be without a roof over their heads at all).
The perception that landlords are extremely wealthy fat cats is wrong. Many landlords are retired people making an investment to fund thier retirement lives or Mum and Pop investors in general.

Some people prefer to rent because, if you're going to be an owner occupier - renting is cheaper and the excess money you would spend on the mortgage can go into other, more flexible investments, like shares.

Say a mortgage would cost you about 2.5 k a month, and rent would be 1.4k - that's 1.1k invested into shares a month, and you still have a roof over your head. And you're debt free.

 

[Deej]

Actually i mentioned i would get rid of negative gearing.

And i've also mentioned i'm not stupid enough to think my suggestions are the perfect solution. I'm open to ideas for ways to spread wealth better, if you have a better idea how it can be done then let us know. Or are you a capitalist **** who doesn't give a stuff about strugglers or poor or the type of world your kids might grow up in?

Life isnt all about getting more stuff you know.

Do you care about engineering some sort of balance or is it just how the world works and each to his own?

 

[bunsen burner]

Actually i mentioned i would get rid of negative gearing.

You said this:

Here's my thoughts, I think the govt should make it a squillion times harder for investment properties to be viable for people renting them out. They should make a special tax ruling for people buying houses or units and renting them out, they can't be negatively geared and any capital gains should be taxed at 95%. Make it near on impossible for people to make money off them. I think property is a cheat's way of making money.

Not sure how you can sit there and deny it? What? Did you think I wouldn't pull you up? Don't care for the rest of your dribble.

 

[SolidTiger]

Actually i mentioned i would get rid of negative gearing.

And i've also mentioned i'm not stupid enough to think my suggestions are the perfect solution. I'm open to ideas for ways to spread wealth better, if you have a better idea how it can be done then let us know. Or are you a capitalist **** who doesn't give a stuff about strugglers or poor or the type of world your kids might grow up in?

Life isnt all about getting more stuff you know.

Do you care about engineering some sort of balance or is it just how the world works and each to his own?

I am not sure if you noticed, but this is mainly a capitalist country and I think this country is doing just fine. Sure this counrty is not perfect but I would rather be in this country than any other. I think the best way to help spread the wealth is to for the government to help the strugglers keep up instead of dragging everybody else down.

I can't see how abolishing negative gearing and increasing capital gains tax is going to help the strugglers or poor. If anything it is going to be tougher for them because there will be less rental properties availiable and they would be forced to go to the more expensive option of paying a mortgage if they were to buy a house. The proportion of the average income to meet the average home loan is 37.4% while renters are paying only 24% of their income. If the renters are struggling to pay 24% of their income for a roof over their heads what makes you think they can afford 37.4%?

There are many reasons for the housing affordabilty problems at the moment. I think the main reasons are the increasing population, high demand for property, not enough homes being built, the 2030 plan (in melbournes case), the fall of the HIH (this started a chain reaction in which slowed the amount of new homes being built), low unemployment, economy running very strong, etc. Investment properties has little effect for the supply and demand problem.

 

[Moo]

I actually think the tax breaks for NG are too much and we would be better off encouraging research and development of real industries....though I am far from advocating the removal of all NG.

I would think allowing a claim of around 90% of interest paid would start to make some think about alternative areas of investment.

 

[bunsen burner]

I actually think the tax breaks for NG are too much and we would be better off encouraging research and development of real industries....though I am far from advocating the removal of all NG.

I would think allowing a claim of around 90% of interest paid would start to make some think about alternative areas of investment.

We have a housing shortage in most cities. Why would we want to turn investors away?

 

[Deej]

I've also said that my strategies may not be the best way to keep a healthy balance in wealth distribution in Australia. If you have any better suggestions please write them down. I suspect you won't have anything to write down because you dont particularly care about it, but i hope i'm wrong.


I'll give you this, one thing i have done wrong here is I have made a moral judgement on people who are into investment properties. I shouldn't do that because people are operating legally, it's not their fault this is the system that we live in.

To Dan26, you're right this couldn't be something you'd backdate, it wouldn't be fair on those who have basically structured their whole life around these laws. It's my opinion that if you outlawed NG and taxed capital gains much higher on investment properties, that lots more properties become available for purchase and as a result prices fall to a more affordable level. Of course this would only be but one part of the plan, as i mentioned more public housing would be necessary, probably some legislation to control how much a bank is allowed to lend home owners (eg.no more than 90% of value of property), maybe stamp duty needs to be looked at, maybe all of the above and more. Population control would be something i'd bring in if i was god.

 

[Moo]

We have a housing shortage in most cities. Why would we want to turn investors away?

Because our lack of industry R&D is an area of greater need IMHO.

On the back of this great resources boom we need to start strenthening our positions in other technologies whther it be solar, pharma, engineering or nuclear.

Taking back 5-10% off gearing of properties or even staggering (up to 500K 100%, 500-750K 95% etc) would not bite overly in the market.

The fact is the returns on real estate are too weighted on the face of the risk/return on start up or R&D of a reasonable nature.

Innovation in this country has worried me for a long time - maybe I am just getting old.

 

[Aquamarinejewel]

Again, I have had to delete posts from this thread - next one to throw an insulting personal barb at a fellow poster ...will be copping an infraction for abuse.

 

[HighettBomber]

It's my opinion that if you outlawed NG and taxed capital gains much higher on investment properties, that lots more properties become available for purchase and as a result prices fall to a more affordable level. Of course this would only be but one part of the plan, as i mentioned more public housing would be necessary, probably some legislation to control how much a bank is allowed to lend home owners (eg.no more than 90% of value of property), maybe stamp duty needs to be looked at, maybe all of the above and more. Population control would be something i'd bring in if i was god.

The sort of ideasyou have been advocating are not new, its called Communism. It's been tried and doesn't work. If you try and divide the pie evenly, without rewarding those who act to make the pie bigger you just end up with a smaller pie and a lot of unhappy people.

 

[Deej]

The sort of ideasyou have been advocating are not new, its called Communism. It's been tried and doesn't work. If you try and divide the pie evenly, without rewarding those who act to make the pie bigger you just end up with a smaller pie and a lot of unhappy people.

I'm not talking about pure communism, I'm talking about trying to create a balanced solution. I don't have all the answers but I know there exists problems right now and bigger ones looming on the horizon in this world if we don't address these sorts of issues. I doubt people are happy to be trapped in this cycle by the banks who are advancing their % stake of wealth in society via this system that helps them do it. You're not really getting anywhere if you own a house worth 1.4 million over the guy who owned it 5yrs ago when it was worth only 300 grand. Yet people perceive that they are wealthier? It's crazy!

I'm one of the lucky ones, this isn't about helping me, I'll be well ahead financially no matter what happens. But if this system which creates such a massive financial disparity then leads to increased resentment from the have nots, well then who knows what could develop in the future? I have always suspected various types of crime and mental anguish and marriage breakdowns and in the extreme even stuff like terrorism festers in these sorts of environments. If the price we pay for having this each to his own type system is we cant walk the streets at night then have we really gotten ahead? Sure you live in a fancy house, drive an M3, got a 30ft fishing cruiser out back, but we can't walk down the street at night - i rate that as about breaking even. And that's if you're 'lucky'. What of those who aren't as 'lucky' financially?