"Buildings appreciates, land appreciates"

From: Jas


Buildings appreciates, land appreciates

Why?

Just because I get a piece of paper from the ATO saying I can depreciate a building, why do they depreciate? Is someone saying that it costs less to replace it over the years? No, because of inflation, buildings actually cost (roughly) the same or more.



Is it because they need constant repair? No, because I am also allowed to deduct the cost of the repair by the ATO.



Is a beautiful heritage building worth less over time, or does it appreciate in value? If it’s maintained, its worth more and more.



So why?



Conversely, dirt appreciates. Again why? The old saying that there aren't making any more of it doesn’t matter. What happened on the gold coast and in Manhattan wen they ran out of land? They build up instead. We got lots of air to build into.

Supply and demand? That causes a fluctuation in prices sure, but why should they (generally) keep going up?



Jas





To paraphrase Charles Mackay – By the vile arts of stock-jobbers!
 
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Reply: 2
From: Paul Zagoridis


I like this Jac, re-evaluate our fundamental assumptions.

Buildings depreciate because even with maintenance they eventually become dust. If you are patching and patching and patching are you left with any of the original structure?

Land appreciates becasue if you want to build up you eventually need to knock whatever is there down. Then you build up.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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"RE: Buildings appreciates, land appreciates"

Reply: 2.1
From: Jas


> From: "Paul Zagoridis" <paulz@bigpond.net.au>
>
> Buildings depreciate because even with maintenance they eventually
become
> dust. If you are patching and patching and patching are you left with
any
> of the original structure?

Is this the "it's the same trusty old axe (with three new heads, and
five new handles)" argument?

But now I'm double dipping tax wise, once for repairs and once for the
original building.

Also eventually is a long time. If you can only deprecate for 40 yrs,
this implies building are worthless after that time frame. But trying
saying that to someone who owns a beautiful federation house...

> Land appreciates becasue if you want to build up you eventually need
to
> knock whatever is there down. Then you build up.

Land on the edge of a city doesn't need anything knocked down. Is this
why it's cheap?

Jas
 
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Building depreciation

Reply: 1.1
From: Dale Gatherum-Goss


Hi Jas!

The idea of depreciation is that it is meant to reflect the wear and tear of an item over time and thus it's reduced value and useful working life.

Truth is, the main reason the government allow you a tax deduction for the depreciation of a building is so that you will buy IP's and this means that they don't have to house all of the people who cannot get a house of their own.

Have fun!

Dale
 
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RE: Building depreciation

Reply: 1.1.1
From: Jas


> From: "Dale Gatherum-Goss" <dalegg@bigpond.net.au>

hey dale :)

> The idea of depreciation is that it is meant to reflect the wear and
tear
> of an item over time and thus it's reduced value and useful working
life.
>
> Truth is, the main reason the government allow you a tax deduction for
the
> depreciation of a building is so that you will buy IP's and this means
> that they don't have to house all of the people who cannot get a house
of
> their own.


What you're sayng is that in reality, buildings don't depreacite...
So the saying "land apreciates, buildines depreciates " is wrong?

Jas

To paraphrase Charles Mackay - By the vile arts of stock-jobbers!
 
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Reply: 3
From: Lotana Von Amor


Speculating on the topic...
Buildings depreciate - land appreciates. Right. When buying for growth, the bigger is land share the better. But why then building on the land is called an "improvement"? Because it improves our tax returns allowing depreciation deductions. Is this a good compensation for the lost appreciation? Hardly. So, the ideal IP for growth is a block of land rented out to campers - we'll get full appreciation on the 100% of the purchase price plus some rental income too!

Don't take it too seriously though...
Lotana
 
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"RE: Buildings appreciates, land appreciates"

Reply: 3.1
From: Jas


> From: "Lotana Von Amor" <analysts@fitbits.com.au>
>
So, the ideal IP for growth is a block of land
> rented out to campers - we'll get full appreciation on the 100% of the
> purchase price plus some rental income too!


Sounds brilliant! I'm off to find myself a camping ground for sale :)

Jas


To paraphrase Charles Mackay - By the vile arts of stock-jobbers!
 
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"RE: Buildings appreciates, land appreciates"

Reply: 2.1.1
From: Paul Zagoridis


Yes it is the same trusty old axe.

And you're not double dipping. You depreciate capital expenditure and deduct expenses. A single expenditure cannot be both capital AND expense using normal physics (give us time and there will be a quantum way to achieve it).

Have you ever spoken to someone who lives in an UNlovely federation house?

Draughts and creaks and knocks, oh my! Plumbing and electricals and gas lines, Oh my! WC's and water-courses and right angles!

For every quaint federation house there are hundreds of dodgy reno's and money pits. Bit like British luxury saloons really. ;-)

And YOU raised Gold Coast and areas with land scarcity. Do you know why industrial parks are built on city outskirts? Because the land is CHEAP, there's lots of it. If the owner wants millions for it, there's normally some dairy farmer who'll move his cows one paddock over in return for beer money.

Why is river-, harbour-, and water-front expensive? Because you can't get any more of it.

Now sometimes a new freeway goes in and land that was an hour away is now only 20 mins away. Boom time because it seems like the land has "moved", it gets priced closer to 20 minute land than 1 hour land.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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"RE: Buildings appreciates, land appreciates"

Reply: 2.1.1.1
From: Rolf Latham


So Paul, why do you think BMW unloaded Rover :eek:)

A car named after a noble cat is one thing, but to name a car after Fido is a worry.

Ta

Rolf
 
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"RE: Buildings appreciates, land appreciates"

Reply: 2.1.1.2
From: Jas


> From: "Paul Zagoridis" <paulz@bigpond.net.au>
>
>
> Draughts and creaks and knocks, oh my! Plumbing and electricals and
gas
> lines, Oh my! WC's and water-courses and right angles!

Lions and tigers and bears! It truly is a jungle out there!

JAs



To paraphrase Charles Mackay - By the vile arts of stock-jobbers!
 
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"RE: Buildings appreciates, land appreciates"

Reply: 3.1.1
From: Steve Navra


Hey Jas,

Make sure it is a camping ground in an area of high land demand!

Regards,

Steve
 
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