I have never thought the top 1% of earners are the only ones buying property. In fact, I'd be very surprised if they're buying a property here and there.
I don't get why people buy an investment property to get rid of it in 5 years. How is that setting you up for retirement? It's quite clear that people doing it that way are only doing it to reduce their taxable income.
My husband and I want to buy property for our kids' future, not to get out of paying tax.
If we did get approved for the cheap apartment it would most likely have been positively geared anyway.
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21-02-2016 22:02 #51
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21-02-2016 22:16 #52
It's not about getting out of paying tax, investors still pay it but at a reduced rate. As I said, investors also pay stamp duty and land tax.
22-02-2016 08:49 #53
22-02-2016 09:02 #54
The more I think about this the more I support a big increase in the first home buyers grant and for negative gearing and capital gains tax to stay as they are.
22-02-2016 09:48 #55
Negative Gearing - Politics talk
Buying and selling property every 5 years... What an expensive exercise! Stamp duty alone would eat a huge chunk of your profit, as well as real estate agent commission..
I don't come across many people who do that, and I deal with a lot of property owners. The main reason people buy and sell is if they are upgrading or downgrading their home, in which case they are not investment property owners in any case. There are always exceptions and people have all sorts of different circumstances.. Buying vacant blocks of land and developing and subdividing.. Hmmm not in Sydney I'm afraid to say. Also most people are not inclined to invest their time and energies.
Also, $80k income is a decent amount to be earning if you want to buy an investment property. The bank evaluates your borrowing capacity based on the fact that you will be receiving rental income. In fact, most people with investment properties are middle income earners, and most people don't make huge negative losses. When there are large losses, it is mainly due to depreciation. This is especially true in the current economic climate with interest rates being at a record low and rent being at a record high.
My point is, investment properties are actually affordable if you're smart about it, and if you are good at saving a deposit. You don't need to be rolling in money to buy a property. If you're trying to buy a family home on the other hand, that could be difficult, especially for first home buyers. There's definitely something wrong with the market.
The elephant in the room which the government doesn't want to acknowledge at all, is that people are waaaaaay over their heads in debt. That's all fine right now while rates are low, but once they start to rise, people will not be able to afford to pay their loans and there will be a significant market adjustment. Maybe rather than making big changes to negative gearing, the government should force banks to be stricter with lending?
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22-02-2016 10:01 #56
22-02-2016 10:07 #57
Not to mention the loss in paying interest for the months of renovating/building that needs to be done. The potential losses can be quite scary and I'd say many many people would avoid going down the route.
22-02-2016 10:24 #58Senior Member
- Join Date
- Jun 2009
I bought my investment property at 24, single, with a little bit of savings (I was on around $40k at the time), had the 1st home buyers grant and bought a brand new house in a cheaper area so as not to over extend myself. I neg geared to help me save up for a 2nd property which ended up being our family home.
It was the best thing I ever did although I went without on other stuff.
It helped me and hubby buy our home now and although we don't have the house any longer, I'd do it again and again in the hope that I could live without having to rely on the pension to fund my retirement & help my kids set themselves up as well.
22-02-2016 12:11 #59
I support a reduction or revision of negative gearing because other than to give individuals tax concessions, it's done little to do anything else. Most importantly for me, it's done little t increase the supply of affordable housing in this country.
There is this idea that removing negative gearing will slow down housing construction. But this isn't true when only about10% of investor loans seem to be for people planning to build or buy brand new homes. Most are buying existing which doesn't put more housing on the ground, deal with supply issues or stimulate the construction industry.
There's this idea that t will drive rents up. Not true in the 80s when negative gearing was removed for a time, other than I think Perth and Sydney. So it would suggest not just negative gearing was at play there.
The best driver of prices in the rental market, in my experience is demand. Not investor driven but consumer driven. Demand is higher than supply, rent prices are higher.
Negative gearing combined with other associated tax breaks go to the top 10% of income earners, not middle income Australians just trying to protect theirs and their children's futures. And I'm not averse to the rich paying more tax.
IMO incentives for construction, particularly in the affordable housing space, and negative gearing being conditional on new properties is a better idea.
We have such a shortage of affordable housing in Aus and little to no policy direction on the issue. I was at a lecture recently where a respected housing lecturer suggested that we will need an additional 1,000,000 dwellings by 2050 and even if only 10% of those were needed in the affordable housing space, that's still an additional 100,000 properties the community sector will need to construct, largely without government assistance or funding.
So for me, any incentive that encourages growth of housing stock, and increase in affordable housing is beneficial and I'd like to see the major parties investigate that a little more.
I'm about to become a landlord for the first time. So this will impact on my family. So whilst on one hand negative gearing makes our lives easier, it doesn't do much for the lives of people I work with every day.
22-02-2016 12:40 #60
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