The negative gearing election

[Power Raid]

Housing prices (property investing) + Power prices (share investing) = Expense of other Australians

I still don't get your logic.

If the money went in the bank, the bank lends the money to people that invest or invest direct to generate a return for shareholders. In fact the money paid by lottery ticket participants took the money out of the bank to buy their ticket. So putting the money in the bank would be back to square 1 less the money delivered to charities.

If the winner buys a house and leases it out, there is not net effect to supply and demand thus no negative impact on housing prices. Same said with shares.

If the winner builds new supply or participates in an IPO, then the new supply lowers prices.

I get the fact $50m is a lot for one person but I'm pleased to hear its gone to a sensible person who is prepared to invest the money responsibly until they have had time to consider their options. That's far better than piss it up against the wall, engage in needless consumption and other activities that are bad for the environment.

 

[Power Raid]

Isn’t he already paying 50 percent tax on all his winnings? That not enough? Plus since when is not giving all your money away the equivalent of screwing over people?

no tax on "windfalls" unless gambling is your occupation or too routine to be considered a windfall.

it should be noted the profits from lottery goes to charities though.

 

[RupieDupie]

I still don't get your logic.

If the money went in the bank, the bank lends the money to people that invest or invest direct to generate a return for shareholders. In fact the money paid by lottery ticket participants took the money out of the bank to buy their ticket. So putting the money in the bank would be back to square 1 less the money delivered to charities.

If the winner buys a house and leases it out, there is not net effect to supply and demand thus no negative impact on housing prices. Same said with shares.

If the winner builds new supply or participates in an IPO, then the new supply lowers prices.

I get the fact $50m is a lot for one person but I'm pleased to hear its gone to a sensible person who is prepared to invest the money responsibly until they have had time to consider their options. That's far better than piss it up against the wall, engage in needless consumption and other activities that are bad for the environment.

Yeah that’s the reason why house prices haven’t increased since the 70s... Who are you trying to convince here?

If a person wants to invest, why wouldn’t they want to have invested in AGL, 196% increase in profit. But people with $50M who want to invest are looking for ways to give people money...

 

[Power Raid]

Yeah that’s the reason why house prices haven’t increased since the 70s... Who are you trying to convince here?

If a person wants to invest, why wouldn’t they want to have invested in AGL, 196% increase in profit. But people with $50M who want to invest are looking for ways to give people money...

house prices are a function of supply/ demand, inflation, interest rates and incomes. You will struggle to find any study on property blaming it on lottery tickets. I dare say dual income families, foreign investment and a low interest rate environment is where you should be looking.

With AGL you have a perfect storm. Moronic states have banned gas exploration, meaning the supply demand formula has favoured owners of gas reserves. Adding to that we have moved to renewables that need gas to deliver power when they can not. So AGL has gone up due to underlying fundamentals rather than a supply in balance due to lottery winnings.

 

[Seeds]

no tax on "windfalls" unless gambling is your occupation or too routine to be considered a windfall.

it should be noted the profits from lottery goes to charities though.

Really???

So if I win income through luck and no hard effort I pay no tax but income through work is taxed. That is backwards.

 

[RupieDupie]

house prices are a function of supply/ demand, inflation, interest rates and incomes. You will struggle to find any study on property blaming it on lottery tickets. I dare say dual income families, foreign investment and a low interest rate environment is where you should be looking.

With AGL you have a perfect storm. Moronic states have banned gas exploration, meaning the supply demand formula has favoured owners of gas reserves. Adding to that we have moved to renewables that need gas to deliver power when they can not. So AGL has gone up due to underlying fundamentals rather than a supply in balance due to lottery winnings.

There’s something lost in translation here;

Invest in property... In-vest... I-n-v-e-s-t... Have a think about what this term means.

Property = X value
Invest
Property = X x %

Let’s get serious here please.

Likewise,

AGL - “Let’s arbitrarily increase power prices by 20%”. Surprise surprise they get munny, no other arbitrary reasons required.

 

[Frank Grimes]

Yeah, it is looked at as a positive thing, that a person with munny has to take from those who don't. I wonder how many slaves he will have paying rent to pay off his negatively geared investment properties? Another Australian just trying to get ahead.

With $50 million I can't see why he would need to negatively gear. He wouldn't even need a loan. He would actually be positively geared and pay tax from the income from his investments.

 

[Power Raid]

Really???

So if I win income through luck and no hard effort I pay no tax but income through work is taxed. That is backwards.

so hear is the tax loophole for money laundering and thus why criminals are attracted to the horses, dogs and race tracks.

Imagine you have a dope farm or a meth lab with unlaundered money. You take that cash and buy 10,000 tickets to a speedway race/ horses etc at $25 a pop. The ticket sales are revenue but offset by a prize. You have 10 family members each with a hobby hotted up Monaro and you take it in turns winning the race.

You also have a few bets and again miraculously you or one of your 10 family members win on constructed long odds.

Tax gambling and let's see how many criminals are still interested in these industries.

 

[Seeds]

From what I understand you don’t need to pay tax on gambling wins in Australia. He would have to pay tax on interest.

But my argument is he is investing to make munny because $50M isnt enough, your argument is that he’s investing to help people.

I’m not saying he is investing to help others. It’s clearly out of self interest. But investing in shares is usually productive and benefits others as well through lower interest rates and more and thus cheaper productive capital. Do you understand the concept of non zero sum transactions? They can benefit you and others and thus don’t screw everyone else over. Now if he was extracting rents through political donations then I would agree he is using the money to screw others over. But share investment no.

 

[RupieDupie]

With $50 million I can't see why he would need to negatively gear. He wouldn't even need a loan. He would actually be positively geared and pay tax from the income from his investments.

Wouldn’t it therefore be more evil to get a renter to pay it off?

 

[Seeds]

so hear is the tax loophole for money laundering and thus why criminals are attracted to the horses, dogs and race tracks.

Imagine you have a dope farm or a meth lab with unlaundered money. You take that cash and buy 10,000 tickets to a speedway race/ horses etc at $25 a pop. The ticket sales are revenue but offset by a prize. You have 10 family members each with a hobby hotted up Monaro and you take it in turns winning the race.

You also have a few bets and again miraculously you or one of your 10 family members win on constructed long odds.

Tax gambling and let's see how many criminals are still interested in these industries.

Learn something new every day. Why is our tax system so stupid.

 

[Power Raid]

There’s something lost in translation here;

Invest in property... In-vest... I-n-v-e-s-t... Have a think about what this term means.

Property = X value
Invest
Property = X x %

Let’s get serious here please.

Likewise,

AGL - “Let’s arbitrarily increase power prices by 20%”. Surprise surprise they get munny, no other arbitrary reasons required.

cough cough

everyone said if you remove coal and rely upon renewables the biggest beneficiaries would be gas. That's why the gas industry is the renewables biggest supporter.

You can't blame a gas shareholder for a share price increase when the increase was due to an underlying fundamental. Invest or not and the share price would increase.

In fact the more dollars going into the sector, the greater the pool of capital that could be tapped for new investment, increasing energy supply and reducing prices.

 

[Power Raid]

Learn something new every day. Why is our tax system so stupid.

I won't rattle off names as that would get me in a colourful position but I'd suggest their has been a close relationship between politicians, corrupt business officials (especially in property, waste management, parking and car yards), police and unions.

It's hard not to see why this loophole exists when you see how each have a vested interest in this loophole. I will note though that Italians and Irish backgrounds were very good at this along with long established Australian families.

 

[Power Raid]

Learn something new every day. Why is our tax system so stupid.

there's another loophole which is "hobbies" type business operations aren't taxed.

the marafioti family tried to use this loophole explaining their vast property empire and 4 story house came from proceeds from grandmas chooks. she had 4 chooks and as a hobby just sold the eggs out the front.

The judge didn't buy into the idea these 4 chooks laid 15,000 eggs per day

 

[RupieDupie]

I’m not saying he is investing to help others. It’s clearly out of self interest. But investing in shares is usually productive and benefits others as well through lower interest rates and more and thus cheaper productive capital. Do you understand the concept of non zero sum transactions? They can benefit you and others and thus don’t screw everyone else over. Now if he was extracting rents through political donations then I would agree he is using the money to screw others over. But share investment no.

Ah yes, when you look at most theory of societal constructs, and they’re for the benefit of society. But when this is applied, you get actual society where AGL gets 196% profit at the cost of Australian citizens, banks admit they’re increasing interest rates to maintain profit for their shareholders, housing prices are increasing to only benefit property investors. No growth. No innovation.

 

[RupieDupie]

cough cough

everyone said if you remove coal and rely upon renewables the biggest beneficiaries would be gas. That's why the gas industry is the renewables biggest supporter.

You can't blame a gas shareholder for a share price increase when the increase was due to an underlying fundamental. Invest or not and the share price would increase.

In fact the more dollars going into the sector, the greater the pool of capital that could be tapped for new investment, increasing energy supply and reducing prices.

The underlying fundamental = shareholder = reason price increased

 

[Frank Grimes]

Wouldn’t it therefore be more evil to get a renter to pay it off?

Pay off what? Assuming he doesn't have a loan.

It doesn't make much sense to me to get a loan and negative gear in that circumstance.

If it's positively geared he's making a profit and paying tax rather than negatively gearing (I.e the government taking money off him rather than him withholding tax). So no, I don't think it's more evil.

Regardless it's not that great strategy to buy property in this environment with prices likely to decrease for a fair while.

 

[RupieDupie]

Pay off what? Assuming he doesn't have a loan.

It doesn't make much sense to me to get a loan and negative gear in that circumstance.

If it's positively geared he's making a profit and paying tax rather than negatively gearing (I.e giving to the government money rather than withholding tax). So no, I don't think it's more evil.

Regardless it's not that great strategy to buy property in this environment with prices likely to decrease for a fair while.

The renter can pay off the home loan. The buyer can outlay a bit of the cost. Get a very discounted house. It could be a very evil strategy.

 

[Power Raid]

The underlying fundamental = shareholder = reason price increased

that's called an arbitrage............short sell as it will come down if there is nothing fundamentally holding it up

 

[RupieDupie]

that's called an arbitrage............short sell as it will come down if there is nothing fundamentally holding it up

Yep, and that’s what happened immediately after AGL announced their 196% profit. How did that work out for Australia, did we all benefit?

 

[RupieDupie]

Learn something new every day. Why is our tax system so stupid.

It’s not dumb for the people who it advantages, who “coincidentally” create it. You’re seeing the light though Seeds, now all you gotta do is run with it. I’ll even teach you how to use the term “munny” if you want?

 

[Long Live HFC]

The coalition's policy position on this issue can likely be explained by the number of their federal MPs who negatively gear themselves.

in 2016 the AEC recorded 15.6M votes in the federal election. the number of property investors is approx 2M. i would suggest the relationship between these two numbers plays a far greater part in tax reform than the personal affairs of the occupants of either house (if you'll pardon the pun). the ALP's policy likewise reflects these numbers imo; hence the "grandfathering" of current investment arrangements.

interesting tat property prices have gone into negative territory after tightening of foreign investment.

i think you're making the same single-cause fallacy argument that opponents of NG typically engage in. you know as well as anyone that the tighter restrictions on lending/capitalisation generally and changes to investment interest rates are at least as influential as any other recent reform.

Really???

So if I win income through luck and no hard effort I pay no tax but income through work is taxed. That is backwards.

i think it's pretty consistent. you can't claim gambling losses at tax time so i think it's reasonable that you don't need to declare winnings (unless you're a Pro as power raid stated).

 

[Power Raid]

in 2016 the AEC recorded 15.6M votes in the federal election. the number of property investors is approx 2M. i would suggest the relationship between these two numbers plays a far greater part in tax reform than the personal affairs of the occupants of either house (if you'll pardon the pun). the ALP's policy likewise reflects these numbers imo; hence the "grandfathering" of current investment arrangements.



i think you're making the same single-cause fallacy argument that opponents of NG typically engage in. you know as well as anyone that the tighter restrictions on lending/capitalisation generally and changes to investment interest rates are at least as influential as any other recent reform.



i think it's pretty consistent. you can't claim gambling losses at tax time so i think it's reasonable that you don't need to declare winnings (unless you're a Pro as power raid stated).

It’s not a mistake at all.

Why introduce negative gearing restrictions to create a tax treatment based on class divide when the issue has been proven to be foreign investment?

 

[Long Live HFC]

It’s not a mistake at all.

Why introduce negative gearing restrictions to create a tax treatment based on class divide when the issue has been proven to be foreign investment?

i feel it has already been explained to you. you have no metric with which to separate or identify the impact of foreign ownership reforms when considered alongside interest rate changes for investment properties and capitalisation increases. so yes, i do agree with you that the change you identify is one factor, but your post indicated it is the sole factor which we both know is not the case.

 

[Power Raid]

i feel it has already been explained to you. you have no metric with which to separate or identify the impact of foreign ownership reforms when considered alongside interest rate changes for investment properties and capitalisation increases. so yes, i do agree with you that the change you identify is one factor, but your post indicated it is the sole factor which we both know is not the case.

100%

It is however simple supply and demand and you can measure the fall of foreign investment in residential property and you can look at interest rates.

You can also look at other jurisdictions like Canada who also tighten FIRB policies.

But yes there are 100s of inputs effecting housing prices but you can isolate the material from the immaterial and the political noise.

Often though you do need a reasonable period of time to understand if your looking at a variance or a trend.