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  1. #131
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    Quote Originally Posted by hopeful1986 View Post
    I don't mean to sound ignorant or offend anyone, but people are talking about negative gearing like it's terrible because it only benefits the investor. What about parents who claim PPL from their employer and the government? I'm not saying that I think that's a bad thing because I actually don't, but that only benefits the person receiving the money as well. And I can go as far as to say, if you can't have a child without getting pay out of both, then you shouldn't be having said child.

    Like I said, I'm not saying this to offend anyone, I'm just curious (and not very good when it comes to financials and how it affects society as a whole. When we negative geared our property for a few years, we weren't thinking about the country as a whole).
    These are good points. The issue though is the abuse of negative gearing. The payments you reference are relatively small and end after a short period. Negative gearing has no limits.

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    Quote Originally Posted by Sonja View Post
    These are good points. The issue though is the abuse of negative gearing. The payments you reference are relatively small and end after a short period. Negative gearing has no limits.
    If you don't buy a ridiculously expensive property, then return on negative gearing isn't big either (unless negative gearing includes depreciation? If so, I stand corrected), but yes, you can negative gear for the entirely of your loan, so 30 years worth of negative gearing is huge. But I do still stand by what I say, you (as in general, not you Sonja) can't say one is fine, but the other isn't, unless I'm missing something that I haven't considered.

    I don't know. To me in the end, we all do what is best for ourselves and our families. We don't always consider the bigger picture.

  3. #133
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    The basic premise of housing affordability comes down to "Supply and Demand".

    If there are more properties available than buyers to buy then the price goes down. If there are more buyers than sellers then prices go up. With population growth there has not been enough land made available with effective public transportation and services planned and provided to keep up with demand.

    The State governments particularly in NSW have failed completely at managing land availability and services for that land to keep up with growth.

    Changing the negative gearing won't change the upward trend of property value as the demand for property far outweighs the supply. As long as this is true property prices goes up which makes them attractive investment for investors looking to grow wealth for retirement.

    As mentioned before investors will first look to counter the loss of return by increasing rent so investors will not lose out if negative gearing gets removed.

    There is only one way to make property cheaper and that is an increase in supply. I don't think the right way to do it is by trying to "push" out investors but rather improve services such as public transport and release public land for development. This way families get a homes and investors get to provide for themselves in retirement.

  4. The Following 5 Users Say Thank You to Xanthic For This Useful Post:

    A-Squared  (23-02-2016),Elijahs Mum  (24-02-2016),Janesmum123  (24-02-2016),SpecialPatrolGroup  (23-02-2016),witherwings  (23-02-2016)

  5. #134
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    Quote Originally Posted by witherwings View Post
    The problem with this is that chasing people for the debts is going to be an expensive exercise and virtually impossible if people choose to never return. It would just convert the loans (which are asset in the government's balance sheet) from one kind to another. Effectively no change at all to revenue. Selling the debts to private enterprise will force people to repay - for some reason people are a lot more willing to pay off the credit cards and home loans than they are willing to pay their tax debts...
    I think the ato is everyone's last creditor on the repayment hierarchy. and rightly so. it's a debt that's indexed but not interest bearing and you can't default on it. who in their right mind would prioritize repaying their hecs debt over a credit card debt? it makes no logical sense.

    I'm on mat leave currently and am on a payment plan for last year's tax debt. I've got the money to repay in full but why should I? if I can negotiate an interest free loan with the ato, why would I not take it? anyway I'm hoping for/expecting a refund this year so whatever refund I get will pay off the remaining tax debt and I intend to put any excess into my hecs debt as I want to keep repaying it. if I miss a repayment now it'll just get indexed again and I'll have effectively thrown last year's repayment in the bin. I don't feel I'm irresponsible by not making repaying my hecs my #1 repayment. it's an interest free loan and I'm not doing anything illegal. I'm also not going to be stupid though and give money to the ato that I might need in an emergency.

  6. #135
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    Quote Originally Posted by hopeful1986 View Post
    If you don't buy a ridiculously expensive property, then return on negative gearing isn't big either (unless negative gearing includes depreciation? If so, I stand corrected), but yes, you can negative gear for the entirely of your loan, so 30 years worth of negative gearing is huge. But I do still stand by what I say, you (as in general, not you Sonja) can't say one is fine, but the other isn't, unless I'm missing something that I haven't considered.

    I don't know. To me in the end, we all do what is best for ourselves and our families. We don't always consider the bigger picture.
    negative gearing refers to the ability to deduct a loss from an investment against your other taxable income.

    allowable deductions include:

    land tax
    interest on borrowed funds
    depreciation/capital works write offs
    all the other usual running costs associated with a property - council & water rates, body corporate fees, agent management fees, gardening/cleaning, repairs and maintenance etc

    interest is usually the biggest deduction.

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  8. #136
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    SpecialPatrolGroup is offline T-rex is cranky until she gets her coffee.
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    Quote Originally Posted by Xanthic View Post
    The basic premise of housing affordability comes down to "Supply and Demand".

    If there are more properties available than buyers to buy then the price goes down. If there are more buyers than sellers then prices go up. With population growth there has not been enough land made available with effective public transportation and services planned and provided to keep up with demand.

    The State governments particularly in NSW have failed completely at managing land availability and services for that land to keep up with growth.

    Changing the negative gearing won't change the upward trend of property value as the demand for property far outweighs the supply. As long as this is true property prices goes up which makes them attractive investment for investors looking to grow wealth for retirement.

    As mentioned before investors will first look to counter the loss of return by increasing rent so investors will not lose out if negative gearing gets removed.

    There is only one way to make property cheaper and that is an increase in supply. I don't think the right way to do it is by trying to "push" out investors but rather improve services such as public transport and release public land for development. This way families get a homes and investors get to provide for themselves in retirement.
    Didn't intent to thank, I meant to quote.

    I think that the upward pressure on property prices would be less problematic if first home buyers were not having to compete with investors who have a wealth of equity behind them and a view to negative gearing. All of the competition for entry level housing gives vendors the motivation to auction properties to capitalise on the competition, rather than listing at a set price.

    And don't get me started on investors buying and flipping houses to sell with a cheap renovation and increasing the property prices. But that's a separate issue.

  9. #137
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    Quote Originally Posted by Xanthic View Post
    The basic premise of housing affordability comes down to "Supply and Demand".

    If there are more properties available than buyers to buy then the price goes down. If there are more buyers than sellers then prices go up. With population growth there has not been enough land made available with effective public transportation and services planned and provided to keep up with demand.

    The State governments particularly in NSW have failed completely at managing land availability and services for that land to keep up with growth.

    Changing the negative gearing won't change the upward trend of property value as the demand for property far outweighs the supply. As long as this is true property prices goes up which makes them attractive investment for investors looking to grow wealth for retirement.

    As mentioned before investors will first look to counter the loss of return by increasing rent so investors will not lose out if negative gearing gets removed.

    There is only one way to make property cheaper and that is an increase in supply. I don't think the right way to do it is by trying to "push" out investors but rather improve services such as public transport and release public land for development. This way families get a homes and investors get to provide for themselves in retirement.
    Thank you, thank you, 1 million times thank you!

    This is what I mean by government being able to do both (help with affordability AND keep current NG and CGT discounts so those who aren't super rich but want to invest for the future (and not rely on the government in retirement) still can do so profitably.

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  11. #138
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    Quote Originally Posted by SpecialPatrolGroup View Post
    And don't get me started on investors buying and flipping houses to sell with a cheap renovation and increasing the property prices. But that's a separate issue.
    Unless there are structural or safety issues with the renovations, how is this an issue?

  12. #139
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    Quote Originally Posted by turquoisecoast View Post
    I think the ato is everyone's last creditor on the repayment hierarchy. and rightly so. it's a debt that's indexed but not interest bearing and you can't default on it. who in their right mind would prioritize repaying their hecs debt over a credit card debt? it makes no logical sense.

    I'm on mat leave currently and am on a payment plan for last year's tax debt. I've got the money to repay in full but why should I? if I can negotiate an interest free loan with the ato, why would I not take it? anyway I'm hoping for/expecting a refund this year so whatever refund I get will pay off the remaining tax debt and I intend to put any excess into my hecs debt as I want to keep repaying it. if I miss a repayment now it'll just get indexed again and I'll have effectively thrown last year's repayment in the bin. I don't feel I'm irresponsible by not making repaying my hecs my #1 repayment. it's an interest free loan and I'm not doing anything illegal. I'm also not going to be stupid though and give money to the ato that I might need in an emergency.
    You make some extremely good points and I'm definitely not going to contradict you. It doesn't make financial sense at all to pay off an interest free debt unless you are legally obliged to. This is my point though. There are some people (not you, but others such as those who never get over the threshold, sometimes by choice to avoid repaying HECS), and others who move overseas, who will never pay that debt. The HECS debt in 2013 was over 1.5 billion - just based on the returns lodged (bare in mind a lot of people didn't lodge returns, but I assume they can't afford to repay the debt yet in any case). The government wants to increase revenue.. I just don't think getting rid of negative gearing is the solution, when clearly there are other areas that are in dire need of reform. GST, superannuation, higher education loans, deregulation of financial institutions, etc ....

  13. #140
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    Quote Originally Posted by witherwings View Post
    You make some extremely good points and I'm definitely not going to contradict you. It doesn't make financial sense at all to pay off an interest free debt unless you are legally obliged to. This is my point though. There are some people (not you, but others such as those who never get over the threshold, sometimes by choice to avoid repaying HECS), and others who move overseas, who will never pay that debt. The HECS debt in 2013 was over 1.5 billion - just based on the returns lodged (bare in mind a lot of people didn't lodge returns, but I assume they can't afford to repay the debt yet in any case). The government wants to increase revenue.. I just don't think getting rid of negative gearing is the solution, when clearly there are other areas that are in dire need of reform. GST, superannuation, higher education loans, deregulation of financial institutions, etc ....
    I am with you on changes to the GST. I had no issues with the changes tbh...

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