Budget 05 - End of negative gearing
- Thread starter Bear924
- Start date
Bottom line, in my opinion, it makes neg gearing less attractive. But that might be good for property investors because it weeds out the people who are in it just to 'save tax' (dubious anyway) and leaves more deals to the real investors.
Puts more money in people's pockets to pay rent, too!
Alex[/QUOTE]
Hi Alex
So, do you guys mean that in general buying property with negative cash flow (negatively geared) is not a good idea, and we should look for IPs which have positive cash flow (at least with the help of Depreciation)?
Yadeh
Puts more money in people's pockets to pay rent, too!
Alex[/QUOTE]
Hi Alex
So, do you guys mean that in general buying property with negative cash flow (negatively geared) is not a good idea, and we should look for IPs which have positive cash flow (at least with the help of Depreciation)?
Yadeh
Philby said:
With standard distribution curves or percentiles this sort of definition will always have a fair chunk of people under it. "Poverty " is such a relative term - in Australia it often means no pay-TV, a mobile phone without a colour screen or camera in it, and having to drink non-top shelf spirits...
The poverty line in Australia for a couple is more than 40x the average weekly living wage in some parts of the world.
Aren't we doing it tough!
http://www.melbourneinstitute.com/miesi/poverty/Dec2004.pdf
http://www.dawn.com/2005/02/20/ebr3.htm
Cheers,
Aceyducey
PS: I choose to have no Pay-TV, a black & white mobile phone with no camera and prefer to buy no frills soft drinks if I buy them at all. Does that mean I choose to live an impoverished lifestyle?
Aren't we doing it tough!
http://www.melbourneinstitute.com/miesi/poverty/Dec2004.pdf
http://www.dawn.com/2005/02/20/ebr3.htm
Cheers,
Aceyducey
PS: I choose to have no Pay-TV, a black & white mobile phone with no camera and prefer to buy no frills soft drinks if I buy them at all. Does that mean I choose to live an impoverished lifestyle?
Hi All,
I'm with Acey on this... My wife and I also choose not to have pay TV, we have no mobile phones, we choose not to get caught up buying the latest electronic 'gadgets', we have no subscriptions except for API & KPI magazines (tax deductable), we purchase 'home brand' whenever possible, we will eat at a restaurant maybe once a year, and we would eat fast food/takeaway maybe 5 times a year...
We don't feel impoverished at all.
Cheers, Nobleone.
I'm with Acey on this... My wife and I also choose not to have pay TV, we have no mobile phones, we choose not to get caught up buying the latest electronic 'gadgets', we have no subscriptions except for API & KPI magazines (tax deductable), we purchase 'home brand' whenever possible, we will eat at a restaurant maybe once a year, and we would eat fast food/takeaway maybe 5 times a year...
We don't feel impoverished at all.
Cheers, Nobleone.
We also have no pay TV, only one mobile (paid for by work), buy home brand foods, no playstations, take lunch to work & school, but we also live in a housing commission area. There are many around the area that we live in that would be considered living in poverty (ie on pensions and/or unemployment benefits).
My children often complain that its not fair, their friends have pay TV, playstations, lots of expensive brand name clothes, money to buy lunch at school & lots more money to spend on the weekend. I will also add that their friends for the most part have parents that are on benefits. REAL poverty in Australia is only a very small minority.
My children often complain that its not fair, their friends have pay TV, playstations, lots of expensive brand name clothes, money to buy lunch at school & lots more money to spend on the weekend. I will also add that their friends for the most part have parents that are on benefits. REAL poverty in Australia is only a very small minority.
My accountant didn't allow those as deductible- it was a grey ara. ATO's reasoning was that there was a lot of material which was not directly relevant to the way we invested (even including the PI mag with an article on me).Nobleone said:
I eat a lot of takeaway- does that make me rich?Nobleone said:
alexlee said:
I agree. It's amazing how many people do not even understand negative gearing and act on principle 'the more you spend the more you save'. They don't realise that you will never get back from tax more than you spend (except if you have a very large depreciation). A friend of mine wants to start a home business so she can get tax back. When I was buying my first investment property and the seller wanted a long settlement my friends urged me not to accept it because, they said, you want to start 'saving tax asap'. The prices have just started going up, and I for my part was quite happy to control an appreciating asset without paying a cent for as long as I could.
Nic
Aceyducey said:
In a lot of people's eyes...yes. Particularly a lot of those actually close to that arbitrary line. If they can't afford the things I outlined - which are basic essentials in their eyes - they cry poverty...
Of course it's not true poverty. Then again, I'm not saying there's not people doing it tough.
Philby said:
You are.
This budget is the first in many that addresses the injustice of low tax brackets. In fact I advocate an absolute flat tax rate with no threshold whatsoever, where we all pay the same rate of tax.
The flatter the tax rate the more the disincentives for earning more are removed.
So int this case of tax cuts and "budget for the rich"
what I say is simple, whoever wants to have great tax cuts, all he needs to do is earn more money!After all the amount we earn is our own choice and no one else's, the rational person thinks and then acts. some think rich and become rich, some think poor and become poor.
marc1 said:.................................................
So int this case of tax cuts and "budget for the rich"
After all the amount we earn is our own choice and no one else's, the rational person thinks and then acts. some think rich and become rich, some think poor and become poor.
Does that mean we all become entrepenuers/motivational gurus!!!
Easy to say "whoever wants to have great tax cuts, all he needs to do is earn more money!"
My argument is that tax cuts are fine but what about the fundamental services that are being slashed/privatised/minimised/ and user pay systemised. Seems that Howard - "the battlers friend" is putting a lot of the essential things that Joe Public requires, out of reach on pay day, after he has put petrol in his car to get to work, fed the wife and kid(s), etc.
The wealthy can afford to have choice and become richer, seems Joe Public has to work more to earn more.
A fair go for all???? or for those that have the means and screw the rest?
marc1 said:So int this case of tax cuts and "budget for the rich"
After all the amount we earn is our own choice and no one else's, the rational person thinks and then acts. some think rich and become rich, some think poor and become poor.
Marc,
It's been said that if all the money in the world was distributed equally to every person, within a few years the rich would again be rich, the poor would again be poor, and everyone else would be happy working for the rich for their crust.
I don't think that changing a tax rate provides the motivation for people to become rich. Nor does it inhibit those who really strive to do so.
High tax rates as a reason to not get ahead is an excuse used by those who don't choose to put in the effort required to achieve their dreams.
Everybody can achieve wealth. Few ever want it enough to cut through their own justifications and strive for it.
Cheers,
Aceyducey
Aceyducey said:
I agree wholeheartedly of course, yet mine was an answer to a stock statement.
Whoever is dissatisfied with his condition has already given the first step towards change. The problem arises when people are content and propose to remain where they are and for the rest to give a step back.
Dissatisfaction is good, but must be followed by the recognition that action must come from us doing something not for others to relinquish something.
Nevertheless, governments all over the world use the tax system to pluck their carrots offering to be re-elected, this being the main focus of any government.
For re-election different groups are targeted, free tax thresholds Robin Hood style for the masses, high tax break for the middle class, it all depends of how the spin doctors have done their sums and who will be prompted to vote next time around.
I say this again, the only really just and uniform tax system is a flat rate, revenue neutral (probably at a guess around 20%) for absolutely all tax payers from the kid at McDonalds at $5000 to the board member on $300k no different. That is justice. Of course who will survive the headlines "Mean J.H. taxes the unemployed $200"?
It is the same with Land Tax. If we really need a Land Tax, it should be for all properties regardless of ownership or use. One tax for all, this way it would be a much smaller percentage to reach the same revenues. Yet who would face the headlines "Mean premier taxes pensioner with $100 Land Tax"?
It is much easier to tax the mean greedy speculators who push the prices of housing up for their own egotistic goals. This attitude must be punished where it hurts most, and that is the hip pocket. We await eagerly new laws to curb the other ways mean rich people escape taxes. Did you know that Sydney and Havana will be soon sister cities?
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