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  #41  
Old 07-11-2014, 06:10 PM
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jenchris (Jennifer)
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+1 on that Kunama.
I had to grow up in UK in a 70square home with seven bedrooms and there were 5 of us!

Actually that was unfair.
I started off my married life in a 2 bed house in the middle of Bodmin Moor (close to Jamaica Inn) It was lucky enough to have a garage so I didn't have to worry about my car becoming an ice cube in winter - the snow plough could get past too.
It wasn't until I reached Oz that I was able to buy another house that suited my heraldic state (of mind)....and that was because I had scrimped and saved before I arrived. 30 years ago now.
Heraldic state.... alas there's a black bar across my crest.... born on the wrong side of the blanket...But Edward's coat of arms looks good on my CV
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  #42  
Old 07-11-2014, 07:10 PM
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tlgerdes (Trevor)
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I don't think any change to negative gearing laws would last past the first court challenge.

Businesses do it all the time, write off the loss of one part of the business against the gain of another.

So why should individuals get treated differently. I am just running my property portfolio like a "business".

If you remove it for property, it would have to removed for everything (else court challenge), and that would cripple our country, ZERO investment.
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  #43  
Old 07-11-2014, 07:11 PM
Stardrifter_WA
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Quote:
Originally Posted by rat156 View Post

Interest rates were 18.5%!!!!!!


Cheers
Stuart
Oh, I remember those days too. My interest rates hit 17% at their peak.

Although I owned the land outright (paid $10,000) I only had to borrow $21,000 to build the house. However, as much as I had to struggle to pay the mortgage, in those days, it was only a low mortgage, relative to today's mortgages.

Just imagine if interest rates hit 17% on the amount that you have to borrow today?

Cheers Peter
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  #44  
Old 07-11-2014, 07:11 PM
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One other thing people need to consider ( as mentioned earlier ) is the "relative" cost of moving. People used to move into small cheap(ish) houses for a few years then move up as finances allowed. There was a reasonably large range of house sizes, so you could nearly always get in low then move up.
The govt/real estate agents are now such a pack of money grubbing leeches in the sale process, with their fees and charges, that it is no longer affordable to move vs renovate.
Now ( in my area ) people buy a small cheap place, then knock off the back, raze the gardens and stick up a 2 storey McTerdBlock extension, usually building to the boundaries.
They then sit on their first storey balcony and look into everyone elses gardens, and extol the virtues of living in such a nice area,
until those places are also "renovated", and they squeal like stuck pigs about "their" loss of amenity.
End result is no small/affordable housing is left.

Andrew
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  #45  
Old 07-11-2014, 07:15 PM
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Gday Trevor
Quote:
If you remove it for property, it would have to removed for everything (else court challenge), and that would cripple our country,
No it wouldnt, it would just force people to live within their means.
Maybe instead of Apples CEO "coming out", he should have said that he would be happy to pay a fair tax for a fair profit
( but thats the subject of another thread )

Andrew
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  #46  
Old 07-11-2014, 07:53 PM
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It will be interesting to see if action is taken.
It was abolished about 20 years or more ago.
Negative gearing was however brought back.
I have been wondering why NG is in the news again.
Who has caused it to be news?
There are those who do not like to see mere mortals investing in real estate.
Because it takes investment away from business.
Business investment is done by offering shares...so if you were a stock broker you would not be keen on negative gearing.
So who has started the call for an end of negative gearing.
Rents will go up because rental supply will diminish...one would think that would be a concern to Government.
If the push continues it will be interesting how the benefits will be sold to the people.
If a threat to rental runaway is not mentioned I think it will indicate getting rid of negative gearing may suit the big end of town.
It's withdrawal will hurt battlers...renters and mom and dad investors.
I doubt if real estate investment from overseas will drop however.
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  #47  
Old 07-11-2014, 07:55 PM
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Anything that puts downward pressure on house prices is good - get rid of negative gearing and first home buyers grants, then people will be able to buy a house without becoming debt slaves for the rest of their lives. There will be an economic hit while the market adjusts but in the long run it's better for the economy if people don't have all their disposable income tied up in loan repayments. Markets and financial systems have become very corrupted and sick over the last few decades.
I agree totally, and I do think the sooner that this is done the better with the hope to help avoid a much more volatile economic hit later on if that is even possible anymore. I think Australia avoided the housing crash via luck more so than good management and that luck may be running out.

The crash in Spain has at least made buying property here attractive, maybe not yet a reasonable investment but then again nobody wants a return to the days of blind speculation and unreasonable lending(which is still rife in Oz).
As far as a first home goes to have it paid off in under 10 years is a far more attractive prospect than 30+ years and with any luck by the time we may wish to sell both markets should of normalised and we can buy a property we would prefer and without being locked in to debt for the foreseeable future.

It is a situation that must change not one that should be avoided.
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  #48  
Old 07-11-2014, 08:08 PM
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Originally Posted by xelasnave View Post
Business investment is done by offering shares...so if you were a stock broker you would not be keen on negative gearing.
People negatively gear stock portfolios as well. When that gets hugely popular it's usually a good sign that the stock market is heading for a fall.
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  #49  
Old 07-11-2014, 09:27 PM
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You are correct Rick.
I should have said negative gearing in real estate.
I had an overall loss on shares in the early 70s which I off set against other income, that worked so I tried it on real estate.
At the time I thought it was an original idea but I expect others may have used it in real estate besides me.
Nevertheless it was news to all the clients I told.
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  #50  
Old 07-11-2014, 10:18 PM
Renato1 (Renato)
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Quote:
Originally Posted by Larryp View Post
Capital gains tax is discounted the longer you own the asset, and property is normally held for a long time
No it isn't.

What happens is that when you sell the asset owned for longer than a year, you calculate the capital gain (if any), divide it by two, and add it to your taxable income, and calculate the tax.

Of course this means that if you have made a big capital gain, it matters not that you may not be at the lowest tax rate, as you will be pushed into higher tax rates or into the top one. So for really big gains, a fair chunk of capital gains will be at the highest marginal tax rate divided by two.

For assets purchased after 1999, you can hold them as long as you want, but the same calculation applies.
Regards,
Renato
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  #51  
Old 07-11-2014, 10:38 PM
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Originally Posted by Kunama View Post
I think the real problem with housing affordability these days for young people is that they have unrealistic expectations about how much house you need.

Seems that everyone wants a four bedroom with ensuite, study, double garage under the roofline etc etc. Perhaps if people were a bit more realistic about what they really can afford, they would not be in debt up to the eyeballs.

I have had buyers tell me that they could not fit their family into a 3 br house.
I grew up in a 3 br house with 8 siblings.

As for negative gearing, without the tax benefits available, the true cost of owning an investment property would have to be paid for by the tenant. I certainly don't want my properties making me poorer.

Housing affordability in Sydney is not within the grasp of many, but as far as I know there is no law that mandates you have to live there
I think you are correct in part.

Like you I remember in the early 80s when an average suburban house was 14 to 17 squares in size (i.e. 100 square feet per square), and it was pretty barren, apart from perhaps a heater . Nowadays in new estates I see 30 to 40 square house sizes on tiny blocks, with an awful lot of added features that weren't in houses back then.

The other part is the cost of land. State governments have restricted the availability of land to ridiculous extents, which is why it costs so much.

Down here in Melbourne there are huge swathes of rural land quite near the city tied up in "Green Wedges". The owners can graze cows on them.
And it's not like it's really nice nature land - just flat land with nothing much on it.

I know of one owner who tried to get his land subdivided and got nowhere. He was trying to subdivide it into 30 acre blocks.
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Renato
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  #52  
Old 07-11-2014, 10:44 PM
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Quote:
Originally Posted by xelasnave View Post
I have been wondering why NG is in the news again.
Who has caused it to be news?
What is getting up everyone's nose is the investors forcing intending resident buyers out of the market.

As said by various people, when we bought our first property (a unit) in 1976 it was $28K. We sold that for about twice as much in late 1979 to buy a house for about $70K. After some additions and 17.5% interest that went for around $230K in 1989 (and six months earlier it would have got $300K). Today that unit is worth about $700K and the house around $1.2M.

First home buyers around Sydney don't stand a chance if they want to live anywhere within cooee of work. The alternative is live on the outskirts and spend a couple of hours travel time each way to work.

Renting doesn't let them save much towards purchase since the rates are so high.
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  #53  
Old 08-11-2014, 11:30 AM
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I see the problem differently, I have so many colleagues that are complaining about the price of housing, but what have they been doing for the last 15 years? Having their 2 lattes a day, having sunday breakfast at the local coffee shop, maybe smoking 2 packs of cigarettes per week, going out on a Friday night spending $300 on dinner and alcohol, buying the latest iPhone every year and then complaining that they cant afford a deposit on the $1mil house and that it is the investors/Chinese buyers fault as they are driving up the market price.

So what was the investor doing all this time, drinking the office instant coffee, giving up smoking, making do with the phone that work supplies and having a quite Friday night at home (or going out to dinner at the local RSL club for $25).

It is what you do with you money that counts more and working out the priorities in your life.

My wife and I had saved $80k together, before we got married (at 25yo each), while we were living a home with our parents, we saved another $60k in the following year by sacrificing all luxury, we then bought an "expensive" apartment for $300k (1996). We have just moved into our $1.5m house 3 years ago. We have never had a mortgage of greater than $200k, we placed a priority on what we value.

We also have investment properties that are negatively geared, BTW they aren't flash, on contrary, they are the cheapest rental properties in Burwood NSW. We have goals for early retirement and they are part of they or our plan.

We sacrifice things to put our kids to good schools. Our kids don't miss out on anything.

We just don't live an extravagant lifestyle, will go out once a month to the local club for dinner for $60 for the family. We entertain at home a lot with friends and family (everyone bring a plate of food). We drink $10 wine rather than $30 wine. If I go to pub with friends I buy myself a beer, rather than shout the crowd. We have 8 year old cars. We buy a new car every 10 years, rather than every 3-5 years. I wear $40 sunglasses instead of $300 ones.

I have a fantastic life and couldn't want for more. It is all about priorities.
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  #54  
Old 08-11-2014, 11:50 AM
bobson (Bob)
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NG works for rich people to make them richer. A while ago when I had property investment I could claim 17.5% because of my income at the time. But I remember if I earned double of that amount I would have been entitled to claim 48-49%. Obviously it encourages rich people to invest and makes it easier for them.
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  #55  
Old 08-11-2014, 01:03 PM
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Quote:
Originally Posted by tlgerdes View Post
I see the problem differently, I have so many colleagues that are complaining about the price of housing, but what have they been doing for the last 15 years? Having their 2 lattes a day, having sunday breakfast at the local coffee shop, maybe smoking 2 packs of cigarettes per week, going out on a Friday night spending $300 on dinner and alcohol, buying the latest iPhone every year and then complaining that they cant afford a deposit on the $1mil house and that it is the investors/Chinese buyers fault as they are driving up the market price.

So what was the investor doing all this time, drinking the office instant coffee, giving up smoking, making do with the phone that work supplies and having a quite Friday night at home (or going out to dinner at the local RSL club for $25).

It is what you do with you money that counts more and working out the priorities in your life.

My wife and I had saved $80k together, before we got married (at 25yo each), while we were living a home with our parents, we saved another $60k in the following year by sacrificing all luxury, we then bought an "expensive" apartment for $300k (1996). We have just moved into our $1.5m house 3 years ago. We have never had a mortgage of greater than $200k, we placed a priority on what we value.

We also have investment properties that are negatively geared, BTW they aren't flash, on contrary, they are the cheapest rental properties in Burwood NSW. We have goals for early retirement and they are part of they or our plan.

We sacrifice things to put our kids to good schools. Our kids don't miss out on anything.

We just don't live an extravagant lifestyle, will go out once a month to the local club for dinner for $60 for the family. We entertain at home a lot with friends and family (everyone bring a plate of food). We drink $10 wine rather than $30 wine. If I go to pub with friends I buy myself a beer, rather than shout the crowd. We have 8 year old cars. We buy a new car every 10 years, rather than every 3-5 years. I wear $40 sunglasses instead of $300 ones.

I have a fantastic life and couldn't want for more. It is all about priorities.
+1
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  #56  
Old 08-11-2014, 01:34 PM
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I know I cannot afford to buy a house out here in Berwick. Even basic 3br 1 bath properties are now pretty much all 400k and above. Anything more is around 500k or more. And still the commute to the city is either on the Crap Sardine Can Express, stopping all stations to Flinders St, or on the Monash Carpark. Door to door to my uni used to take longer than a flight to Brisbane

Great if you bought a decade or so ago, but for someone who is single and a first home buyer, how the hell are they supposed to afford this, unless they are fortunate enough to be working a 100K+ job (which most people aren't).

I'm planning on moving north to a regional centre upon completing my course, which will place me in a work-from-home position and/or a fairly decent paying gig at a workplace. I don't intend on staying in Melbourne anyway, crap climate and light pollution among other things. Moving somewhere where housing is still affordable, has easy access to dark skies and all the facilities I need.
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  #57  
Old 08-11-2014, 02:28 PM
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As a wage slave, negative gearing is one of the few reasonable ways I can help prepare myself for a retirement that is comfortable. Anyone planning to retire in about 20+ years should not expect much in the line of a pension (it's not going to be possible for the government to fund it), so you've got to look out for yourself and your family.

Negative gearing can be used for more than just property - I actually use it for a managed portfolio (shares, etc), since we now own our home -and that was achieved by some sacrifice and compromise over a number of years. This investment will help boost the superannuation at retirement and relieve the need for a significant pension.

So, I'll be quite annoyed if negative gearing is messed up - I'm not some rich person that we'll be able to survive on just superannuation and whatever meager pension remains.

What other options are available? Not everyone can have a flash, high income business and be able to tax write off many things.

Look at other options to fix house availability and pricing instead of messing with negative gearing - one example: improve decentralisation - get some businesses out of big cities to regional areas. People live where the jobs are, so you can change the nature of the supply and demand on housing in this manner. The problem with doing that is that it's well beyond the thought processes and capabilities of our politicians to handle such a concept and to plan and implement the many necessary steps/items required to achieve the outcome.
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  #58  
Old 08-11-2014, 03:00 PM
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I have a young friend who took my advice to buy a house and negatively gear even though he had to rent accommodation close to his work. He is now married.
Other friends are still complaining houses are too dear and fail to act.
The only time first mate goes to the pub is to pick up his wife who works there..
One can usually buy something someplace which means you get in the market and to a degree in step with inflation.
Folk have been blaming overseas money inflating the market for as long as I can remember. So many are happy to see themselves as victims and complain rather than to do something.
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  #59  
Old 08-11-2014, 03:07 PM
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These days you can borrow easily.
Once the banks would only lend 60 per cent of valuation which equated to 50 per cent of purchase price...
Realistically it is easier to buy these days.
If you are a first time buyer negative gear something and rent something modest to live be careful with your cash and inflation will give you an edge in the future.
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  #60  
Old 08-11-2014, 03:13 PM
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Also ..do you think a falling ozdollar will slow money from overseas investing in real estate
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