CGT and Stamp Duty

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From: Michael Maher


To all persons knowledgeable about CGT & Stamp Duty,

I was at a Dolf de Roos sem the other night and he brought up how Australia has one of the hardest tax deals when it came to buying and selling property. His native NZ, had actually abolished stamp duty when GST came in. I can't remember what he said about CGT there. Anyway, it seems that a lot of countries don't have one or both of these 'taxes'. I would like to find out what people know about the setups in various countries re property related tax. Who has what and why they have it. What they had before, and what happened to make them change that situation.

This is all in regards to another statement by Dolf: 'You guys voted them in!' . How true. I wonder what we can do about that situation. Your knowledge would be appreciated.

MM
 
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Reply: 1
From: Duncan M


One of the greatest whinges I have about GST and Stamp Duty is that Stamp
Duty is levied on the cost of an asset being transferred AFTER the GST has
been applied.. A tax on a tax.. Same with petrol.. GST is charged AFTER all
of the State and Federal Levies have been applied to the cost.

I just get on with life though, I much prefer our current Liberal Govt to
the possibility of a bunch of bleeding heart Trade Unionists and Socialists
:) <checks under the beds for Reds>..


Duncan.
 
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Reply: 1.1
From: Ctrader .


Each country has its' pluses and minuses. But there is no point worrying about what could be, you just have to deal with what is. Yes, N.Z. has no stamp duty or CGT,lower income tax and its' GST is far simpler but its' population base is smaller and that has an economic effect. Yes, Australia is over taxed and over governed, I mean seriously two houses of government at both State and Federal level, N.Z. just has one level of government. But the opportunities afforded by a larger population base certainly offer plenty of scope here in spite of, not because of government and taxes. Just work with the situation you are in.
 
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Reply: 1.1.1
From: Gail H


Hell, let's not start talking politics. I'd rather have a bleeding heart (high taxing) government than a bunch of heartless selfish bastards like the current federal crowd any day. But let's not go there......

G
(Probably the only ol' lefty on the forum and don't even ask me how I reconcile it with property investment)
 
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Reply: 1.1.1.1
From: Gail H


Oh, I forgot to ask - what was Dolf like? His book was my wake up call. Some of his claims are a little extravagant, but his book was quite inspirational to me. Was it worthwhile?

Gail
 
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Reply: 1.1.1.1.1
From: Michael Maher


Dolf was good. Very good. He wasn't a sensationalist or anything like many motivational speakers are. He just challenged the way you think, similar to Robert K, but in regards to property.
The fact that he was a Kiwi, and not American, also made it much more relatable. His stories were about NZ, and Australia, and other parts of the world. But the NZ and Australia stuff (I mean, every Kiwi wants to move here), was very down to earth. Many obvious points that we just pass over. I want to get the 101 things you can do to a property book. That's looks good.

MM
 
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Reply: 1.1.1.2
From: Mark Laszczuk


Gail,
Make that two lefties...

Mark
'no hat, some cattle'

P.S. You don't have to be a heartless, greedy Liberal to want to be financially free, you know. Remember, it's not about the money, but the freedom that money buys.
 
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Reply: 1.1.1.2.1
From: Anonymous


Yes, I liked Dolf too - I thought he gave quite an interesting evening with little or no hype, but he (and Kiyosaki) aren't given many compliments in the 'guru ratings' section of johntreed.com
Still, each to his own, I guess.
 
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Reply: 1.1.1.2.1.1
From: Gail H


No, Reed hates them. I think he is a bit hard on them.

I must admit,though, his evaluations did make me think a bit more about some of their claims. Dolf makes a couple of big ones - for example, that if the value of your property portfolio goes up in value by 1 mill, then you could refinance the whole lot and redraw 1 mill to spend on whatever you want. Even as a newbie I had pause to stop and consider whether any bank in the world would actually do this (and whether it would be wise since any funds redrawn for personal use would not be tax deductible, so would be a monstrous, non-deductible debt). Reed says this is the most outlandish claim of all.

Still, these "gurus" are very inspirational and I still get a lot out of their stuff.

For anyone interested in Reed's guru reviews, its at

www.johntreed.com (under free articles)

Gail
 
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Reply: 1.1.1.2.1.1.1
From: Mark Laszczuk


Yes, I read John's scathing report of Kiyosaki's book, and found it so full of holes, it could have passed for swiss cheese. He does make some good points, but they lose their edge amongst all the nonsense. My opinion of the guy is that he feels he should be the one in the limelight and he's jealous of Kiyosaki's success. But then, that's just my opinion. In his report, he challenges people to write in and critique his essay on RDPD. I thought yeah, I'll take up the challenge, but when I got to three A4 pages of examples of where he was incorrect or inaccurate, and I'd only gotten through about half the thing I gave it away. Besides, he probably would have only dismissed my arguments and written me off as a "Kiyosaki cultist", as he does with anyone and everyone that even remotely thinks Kiyosaki is alright. Judging from his website, the guy has WAY too much time on his hands, and he's really biased. He only writes good reports on gurus he agrees with, and cans everyone else. What I mean by that is that he doesn't say, 'Hey, I don't really like the way this guy presents, but I can see how his style would work.' He just cans them and says their way is dodgy and would never work. Pretty closed minded person.

Mark
'no hat, some cattle'
 
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Reply: 1.1.1.2.1.1.1.1
From: Les .



I'm with you, Mark - I got the distinct impression that if a "guru" didn't have an MBA, than John Reed gave him a "FAIL" - but, if a "guru" does have an MBA, it's an automatic green.

If so, who needs JohnTReed - just check if YOUR guru has an MBA - if YES, stick with him - if not, give him the flick.

It doesn't sit well with me either - but each to their own.... My suggestion is to check out John Reed's website, but have a bucket of salt with you at the time ;^)

Regards,


Les


- "Eschew Obfuscation" - ;^)
 
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Reply: 1.1.1.2.1.1.1.1.1
From: Michele B


I got a bit twitchy with the "just accept what is" responses to the original post in this thread. Dangerous attitude in my opinion, especially en masse.
 
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Reply: 1.1.1.2.1.1.1.1.1.1
From: Mark Laszczuk


So what do you suggest we do, Michelle? We could go to the 'right' and dynamite Parliament House, oppose all immigration, cut off relations with the rest of the world and declare Australia a fascist state or we could go to the 'left' and march up and down the main streets of our respective capital cities holding pathetic placards, yell useless chants and shout pathetic statements at the cops. Okay, seriously though do you (or anyone else for that matter) see any chance of a change in the tax structures anytime soon? I didn't think so. I mean, think about it people, how else are the pollies going to pay themselves those huge super payouts? Geez... Think of it positively, at least some of the money is going to fund public housing (so less people are homeless), schools (so kids at least get some sort of a semblance of an eduscation) and hospitals (never know when you're gong to need one of those). Yes, taxes are annoying and we all hate them, but they are necessary.

Mark
'no hat, some cattle'
 
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Sim

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Reply: 1.1.1.2.1.1.1.1.1.1.1
From: Sim' Hampel


If there was never any chance of us having a say in how our country is run or how we are taxed or anything else for that matter... then we wouldn't be living in a democracy.

If you want to change things... run for parliament ! Anyone can do it... that's how democracy works.

Following on from what Michele wrote, I think the attitude of "we've no real chance of changing it, so lets not bother" is also a dangerous one... and one which I'd think Jeremy would agree is pure battler mentality !

If you feel strongly about it... do something constructive - start by talking to your local MP - that's why they are there. Start a lobby campaign... try and convince the politicians that there are enough people who care about an issue, and get it on the agenda. Run for parliament yourself ! If you think there are enough people who will support your point of view get in there and make your vote count for even more.

Mark, ANYTHING can be changed, even our tax laws. You just need to have the vision and the courage to make it change.

So why don't I do this ? Personally, I'm concentrating more for now on actually doing some investing and working with what we've got... when I've got the time and the money to worry about changing politics, then maybe I'll do something. Until then... I just want to make money, taxes or no taxes.

 
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Reply: 1.1.1.2.1.1.1.1.1.1.1.1
From: Michele B


Actually Mark, what we do isn't relevant. The point is simply that we have a choice.
 
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Reply: 1.1.1.2.1.1.1.1.1.1.1.1.1
From: Jeremy Laws


Sim....
um, gosh, I really don't know what to say!....wow... be still my beating heart!

To all those who disagree (and to quote a movie which should be dear to all our hearts) Suffer in ya jocks ya battlers!

Gail - It is your precious Labor governments that have kept all these disgusting taxes on instead of abolishing them as promised when they received their GST share. The only thing I can say for the little thug Crean and his band of unionists is they will soon move far enough to the right to become irrelevant. We will end up with Greens and Liberal parties being the major groups. For better or worse.
 
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Reply: 1.1.1.2.1.1.1.1.1.1.1.1.1.1
From: DB Bear


Little bells just went off in my head... DING, DING, DING

I have a leaflet in my notes, let me find it, ahhhh, here it is:

Property Owners Association of Victoria (POA (Vic)

Quoting directly from their leaflet ->

"The POA is a non-profit organisation formed in 1979 by a group of property investers, property owners and property managers to represent the combined view of all property owners, whether residential, commercial, retail or industrial, who believe in obtaining fair and reasonable rent income from their property investments. The POA (Vic) is part of the Australia-wide network of POAs. The Association has regular meetings where members can learn of impending developments, help form the associations policies and provide a focused forum for communication between property owners, politicians and policy makers. "

"The Association has lobbied Commonwealth and Victorian Governments in regard to:

* Government Taxation Legislation, with regard to Capital Gains, Depreciation, Negative Gearing, GST, etc

* State Landlord and Tenant Legislation, Planning Codes, Agency Rules,

* State Land Tax, Council Rates & Water Rates

* Boarding House and Rooming House Legislation."

Membership is $50 pa and they have a quarterly newsletter. They also publish document packs and guides for residential or commercial tenancies, selection and management of agents, trades and cleaning standards, etc. The guides include sample leases, flow charts, tenancy info kit for tenants etc, etc.

I cannot vouch for how good they are, but may be worth enquiring about. I only have a Melbourne number but they should be able to direct you to your POA in your state.

Call (03) 9826 0333.

Deb
Melbourne Freestyler Co-ordinator
www.freestyler.net.au
 
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Reply: 2
From: Lisa (UK)


Anyway, it seems
>that a lot of countries don't
>have one or both of these
>'taxes'. I would like to find
>out what people know about the
>setups in various countries re
>property related tax. Who has
>what and why they have it.
>What they had before, and what
>happened to make them change
>that situation.

Hi,

just back to Michael's original question. I'm in England and we have both Stamp Duty and CGT!!! Oh and any other tax you could possibly think of....!

CGT

If its not your PPR then you will pay 22% or 40% CGT on the capital gain made. If you are a company then it will be at corporation tax rates generally 30%.

You need to own the property for a full three years before the amount payable reduces to 95% of the gain - decreasing to 10 years when its 60% of the gain.

Huge CGT bills - very much why people buy and hold here in the UK.

Each individual gets a CGT allowance of around £7200 per year but you can't carry it from one year to the next.

Rental properties are subject to full CGT. The only exemption is if you are deemed to be trading properties i.e buy refurb and sell on - you must not rent them out or live in them at all. In this case you can add up all your profits at the end of the year and pay tax on those as if the properties were your goods. You get no CGT allowance but don't pay it either - good if you buy and sell. Not so good if you want to lease option or wrap!!

You can't create a deal of onselling at a low price either as CGT is calculated on market value - revenue will commission a survey and valuation to be done if they believe you are selling below MV.

There are even rumours of electronic calculations being done by the Land Registry and Inland Revenue based upon historical data rather than using conveyancers and valuers which are too subjective.

Stamp Duty

Another profit killer!!

The threshold is £60k - below this you pay no stamp. If you buy a house at a price over £60,000 but not exceeding £250,000 duty is charged at 1%. For amounts over £250,000 but not more than £500,000 the rate is 3% and if the purchase price is more than £500,000 the rate is 4%.

In the budget a few weeks ago a load of loopholes were closed that people used to pay lower stamp duty.

Regards, Lisa.
 
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