Changes tabled in Henry Tax review

[Rolf Latham]

We do have alreay have a progressive tax system which makes for the emploment on millions

If we simplify things too much that impost on the Dole line may make the whole thing counterproductive in the short term.

ta

Rolf

 

[josko]

I just realised another gaping hole with your arguement, Joe.

Where were all of those OO's and renters in 2008-2009?

Regards JO

 

[VYBerlinaV8]

I suspect that removal of negative gearing actually means that taxable losses are confined to the income generated by the property.

Which is fine by me.

I wonder what it will do to rents, though...

 

[Gools]

Investors dumping stock to who ? The answer is owner occupiers and former renters. The number of people and houses remains the same, the houses don't disappear.

Far from investors subsidising renters, it is the other way around. The sooner negative gearing goes the better for everyone, in the long term investors included as yields will improve through lower real estate prices.

You're dreaming Joe. Where will the demand come from for construction of new dwellings that the increasing population demands? No negative gearing = no demand for construction. I'd feel sorry for the renters then, the price decreases you are predicting will not happen and rents will sky rocket.

 

[Aaron Sice]

Investors dumping stock to who ? The answer is owner occupiers and former renters. The number of people and houses remains the same, the houses don't disappear.

Far from investors subsidising renters, it is the other way around. The sooner negative gearing goes the better for everyone, in the long term investors included as yields will improve through lower real estate prices.

i'm not arguing a fall in values, i'm arguing that there are a large number of pople out there who can't buy a house because a) they cant afford it or b) they're not allowed to afford it - so, they rent.

dump the rental stock and all of a sudden rents spike and the govt will have to fork out a little (a lot!) more than the $50bil saved to provide public housing.

socialism can go f**k itself - it never works.

imagine the voter backlash as rents rose for the "aussie battler". it'd be political suicide. rents would jump $100pw overnight.

 

[Satanoperca]

Blue Card,

I am a little confused. If NG was to be reduced or abolished and we saw a dumping of IP's onto the market this would lower sale prices to maybe a level that many could afford.

If this be the case, lower prices and as you suggest, rents would go through the roof. Wouldn't we reach a point were renting and ownship cost the same.

I for one do not believe that rents would go through the roof. Rents are determined by what people can afford to pay, not what credit is available to them.

Negative gearing works but should only be on new properties not existing. Expenses should only be able to be claimed against income for said rental properties.

This approach should only be applicable to RE and not commerical or retail properties.

Cheers

 

[Aaron Sice]

Blue Card,

I am a little confused. If NG was to be reduced or abolished and we saw a dumping of IP onto the market this would lower sale prices to maybe a level that many could afford.

If this be the case, lower prices and you suggest that rents would go through the roof. Wouldn't we reach a point were renting and ownship cost the same.

close to - absolutely. it may exceed it - becoming CF+ - which more accurately prices in the risk landlords take. maybe the days of privately subsidised housing costs for the financially illiterate / negligent / lazy are coming to an end.

I for one do not believe that rents would go through the roof. Rents are determined by what people can afford to pay, not what credit is available to them.

sorry buddy - rents are determined by what the neighbour is charging, not what the tenant can afford. it's called "the market".

Negative gearing works but should only be on new properties not existing. Expenses should only be able to be claimed against income for said rental properties.

This approach should only be applicable to RE and not commerical or retail properties.

why not existing stock? so someone buys a 2 year old home and they get no neg gearing benefits, but someone who spent a motza in holding costs, building to hold, gets the "so-called" benefit? level playing fields please.

find me a person neg gearing a comm property, so i can call them a sucker.

 

[Satanoperca]

close to - absolutely. it may exceed it - becoming CF+ - which more accurately prices in the risk landlords take. maybe the days of privately subsidised housing costs for the financially illiterate / negligent / lazy are coming to an end.

I agree that illiterate/negligent/lazy people should not be subsidised by either private or government but unfortunately it is just a fact of life. These people should have to pay their dues by providing there time to provide worthwhile services to the greater community. Eg. Cleaning up the rubbish at beaches or on the side of the roads. No intelligence needed

sorry buddy - rents are determined by what the neighbour is charging, not what the tenant can afford. it's called "the market".

Ha, people pay what they can afford or they move to somewhere they can afford. Cannot see what their neighbour has to do with it. Please educate me!

why not existing stock? so someone buys a 2 year old home and they get no neg gearing benefits, but someone who spent a motza in holding costs, building to hold, gets the "so-called" benefit? level playing fields please.

Because it does not provide extra homes for people. From an investment point, I see why one would want to buy existing stock close to the CBD.
You still did not answer the question. How would NG cause a huge increase in rental prices?
Cheers

 

[bene313]

How would NG cause a huge increase in rental prices?

You must mean: "How would removal of NG cause a huge increase in rental prices?"

It's simple demand and supply. BC was proposing the following -- remove the tax benefit, less investment in resi IPs, lower resi for lease on the market, rent price increase as a result.

 

[bdc]

Ha, people pay what they can afford or they move to somewhere they can afford. Cannot see what their neighbour has to do with it. Please educate me!

Its fairly simple, houses get put up for rent at a price similar to the other houses in the area, this is influenced by many things, the most important 2 being the yield and supply & demand.

Most houses go for around that 5-6% yield (against the value of the house), so most people are going to put it at a similar rate, but as the supply dries up (because you have investors selling to fho's/oo's) the supply for RENTALS dries up, and the remaining players increase their prices, each pushing for just a bit more rent than the last, and boom, rental cost explosion.
Sure there are no more houses, but there would now be less choice for admittedly fewer renters, but they can be squeezed harder, and they either can't buy a house, or don't want to make such a big commitment, so they pay the higher rent.

Obviously affordability comes into it, but we have a lot of discretionary income in Australia, so its not likely to be a large factor in the first few years...if it were left unchecked however, things would get dicey.

 

[Intrinsic_Value]

Does anyone know when the henry report will be made public?
ie when are they releasing the document.

help much appreciated.

 

[buzzlightyear]

Does anyone know when the henry report will be made public?
ie when are they releasing the document.

help much appreciated.

Nothing specific as yet. Click here

 

[CG++]

Blue Card,

I am a little confused. If NG was to be reduced or abolished and we saw a dumping of IP's onto the market this would lower sale prices to maybe a level that many could afford.

If this be the case, lower prices and as you suggest, rents would go through the roof. Wouldn't we reach a point were renting and ownship cost the same.

I for one do not believe that rents would go through the roof. Rents are determined by what people can afford to pay, not what credit is available to them.

Negative gearing works but should only be on new properties not existing. Expenses should only be able to be claimed against income for said rental properties.

This approach should only be applicable to RE and not commerical or retail properties.

Cheers

Josko makes the point above that anyone that was going to buy should have done so already. Prices at the lower end of the market fell by 50k in some places. problem with most renters is that they have no deposit. No more 100% lends anymore and the Gvt benefits have dropped significantly.
Not all investors can afford new properties and if you live in NSW forget it. Try finding an affordable development that has the criteria of a good longterm IP. ha!

 

[Aaron Sice]

Ha, people pay what they can afford or they move to somewhere they can afford. Cannot see what their neighbour has to do with it. Please educate me!

Because it does not provide extra homes for people. From an investment point, I see why one would want to buy existing stock close to the CBD.
You still did not answer the question. How would NG cause a huge increase in rental prices?

i'm not going to "educate" you because you are already very knowledgeable, i just think you're missing a small point.

in a world of high rental demand, like the one we're in now, prices are dictated by what your neighbour can get away with. it's collusion-by-default, something i've explained elsehwere on the forum.

in a downmarket, like the 80s, rents are dictated - again, by what your neighbour is charging - that is, how much he's going to undercut you to secure your tenant because no-one is paying what you want.

as mentioned - the REMOVAL of NG would mean investors will either
a) pass on the cost or
b) sell and move to a different asset class.

now, not all investors are NG'd, but those that are that have lost their tax breaks are going to be in a mightly big HOLE - and they'll want out. hell, i would!

 

[HappyCamper]

Can someone explain what happened to property prices and rents in the various market segments (inner / outer) when Keating removed negative gearing in the 80's?

 

[klublok]

I don't know if they could just get rid of negative gearing.

In my view, negative gearing is a natural extension of the way we are taxed, rather than a special arrangement applicable to property investing as such.

You are allowed to deduct expenditure that goes towards making you an income. There is no law prohibiting you running at a loss in the early years to reap rewards in later years - in fact that's how most business and investment works.

So to tinker with this would make the tax system very complex.

 

[keithj]

I don't know if they could just get rid of negative gearing.

If they did for IP then logically they'd have to do it for everything. However, they could quarantine it as they do elsewhere (eg UK). So losses in IP are carried forward until the IP makes a profit and are taxed as a separate entire from personal income.[/QUOTE]

 

[tubs]

The Henry review is just that. A review. Its a whole bunch of recommendations but the government doesnt have to implement all, or any of them. They've said before that removing NG is off the table so its not worth worrying about.

 

[Aaron Sice]

has anyone seen what the Henry Review menas for Federal Mining Royalties?

 

[Peter 14.7]

It reveiw out or is this speculation in other websites/media?

Any hard links to read? Until so any debate is acedemic.

Peter