The article keeps saying "first homer buyers". It's not clear to me whether or not they are abolishing stamp duty on the purchase of an IP .
Have I missed something ?
LL
Have I missed something ?
LL
Government to introduce 2.25% Levy on Sale of Investment ppty's
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Actually perky - if I'm correct in my understanding of the announcement, there isn't any real change for trusts in NSW - in fact it's almost a benefit. With the removal of the land tax threshold for personal investors (trusts never did have a threshold anyway), there is no longer any reason not to buy in a trust (at least not for land tax reasons).
Multiple trusts wouldn't help you unless the scales are sliding where the first $X of land value costs less in land tax than the remaining value. I'm not sure what the new scales are yet - have they published them ?
Multiple trusts wouldn't help you unless the scales are sliding where the first $X of land value costs less in land tax than the remaining value. I'm not sure what the new scales are yet - have they published them ?
The sideways/flat/seasonal market/low clearance rates/"negative growth" one.Aceyducey said:
1) They are seduced and trapped by the government with the negative gearing practice, providing low cost rents (comparative to house prices), that are hopefully compensated by CG.
2) While there are less CG prospects in the near future, and there is a chance that some would like to capitalize on their past CG and allocate more of their resources to other kinds of investment, the more impediments the gov't will put on selling those low yielding properties, the more it'll keep the investors inside. BTW, I think it might help to keep the prices up, i.e. less "flat" ;-)
3) Letting a property at less than 2% yield a year gross, is not a landlord's "choice" to subsidize the tenant, it is a market condition. Why don't landlords raise the rent up to a decent yield? They just don't want to? They prefer to keep it low? C'mon!
Why I call it subsidizing?
Let's play math, hypothetically:
A property in Mosman that might have been sold for 1.6 Mil is rented 600pw, which is 31K pa.
Put the money in an at call account (5.40% @ Citibank, I'm not their shareholder or worker, just an example) and you get 86.5Kpa
That is, somebody at this point PREFERS to lose 55.5Kpa on his capital. Is it his choice? Maybe he is trapped... High selling costs? High CG tax? Too high LVR? "Seasonally & temporarily" weak market? And now they come with their more-than-one-year's-rent levy of 2.25%.
Please don't get me wrong, I do not politically approve that levy, even if it's going to keep my personal rent low.
The new land tax scale (with no threshold) is:
$0 to $400k = 0.4%
$400k to $500k = 0.6%
Over 500k = 1.4%
http://www.treasury.nsw.gov.au/bp03-04/minibudget/minibudget-04.pdf
Jamie
$0 to $400k = 0.4%
$400k to $500k = 0.6%
Over 500k = 1.4%
http://www.treasury.nsw.gov.au/bp03-04/minibudget/minibudget-04.pdf
Jamie
I forsee some areas realising a much greater impact than others. For instance:
1) Albury/Wodonga (twin border towns)... where would you buy now if you lived there & were a first home buyer?
2)Canberra/Queanbeyan... what is going to happen to local owner occupied population in Queanbeyan now??
There are many more areas that will have 'localised' and potentially, disproportionate effects resulting from this change. It will be great for some.
Just think about the first home buyer: no stamp duty for NSW purchase+ $7k grant = instant equity... & since rents will be very likely to rise to cover investors costs, what will the financially capable tenants do??? Probably buy.
I have no idea what the NSW pollies are consuming in their lunch hour, but it sure isn't sandwiches!!
for first home buyers
for renters
for investors
for me
1) Albury/Wodonga (twin border towns)... where would you buy now if you lived there & were a first home buyer?
2)Canberra/Queanbeyan... what is going to happen to local owner occupied population in Queanbeyan now??
There are many more areas that will have 'localised' and potentially, disproportionate effects resulting from this change. It will be great for some.
Just think about the first home buyer: no stamp duty for NSW purchase+ $7k grant = instant equity... & since rents will be very likely to rise to cover investors costs, what will the financially capable tenants do??? Probably buy.
I have no idea what the NSW pollies are consuming in their lunch hour, but it sure isn't sandwiches!!
for first home buyers for renters for investors for me
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Jamie said:
Thanks for that, Jamie. Most helpful
Hmmm. Seeing as there's now no threshold, there will be lots of unhappy investors now forking out land tax for the first time. Because I already have props in trusts, I'm used to saying goodbye to hard earned cash for no good or logical reason. On the one hand, some bills will decrease (owing to the lower rates) whilst I'll be receiving bills on previously exempt property.
Give with the one hand, whilst taking with the other......
I know who I won't be voting for in the State elections
Well, like so many I just sat down and did my Land Tax comparison from this year to what it will be next year.
I'm not happy Bob!!!!!
Yep........stamp duty in.......land tax while you hold.......stamp duty when you exit.......capital gains tax.....etc etc........me thinks the tax level is getting just a tad ridiculous.......
Will I be passing these costs onto my tenants? Every cent that the market will bare!!
I hope when tenants watch the news tonight and take a disinterested glance at how those 'rich' property investors are going to get slugged they stop and think a little how it will affect them too.
I can obviously still see the 'bigger picture' and I know over 12 months, after tax deductions and future rent increases that the weekly cost to myself won't be dramatic. However, there will be plenty paying for these taxes beyond the landlord. Remember that one at voting time Bob.
I'm not happy Bob!!!!!
Yep........stamp duty in.......land tax while you hold.......stamp duty when you exit.......capital gains tax.....etc etc........me thinks the tax level is getting just a tad ridiculous.......
Will I be passing these costs onto my tenants? Every cent that the market will bare!!
I hope when tenants watch the news tonight and take a disinterested glance at how those 'rich' property investors are going to get slugged they stop and think a little how it will affect them too.
I can obviously still see the 'bigger picture' and I know over 12 months, after tax deductions and future rent increases that the weekly cost to myself won't be dramatic. However, there will be plenty paying for these taxes beyond the landlord. Remember that one at voting time Bob.
Jacque said:
That's my reading of it - trusts now pay 0.4% from the first dollar (assuming LV < $400K), instead of 1.7%. And it appears it's on a per property basis. So, as long as no individual land value is greater than $400K then the max is 0.4%. If this is incorrect, then the obvious loophole is multiple trusts. I see this budget as a big +ve for buy & holders, but a big -ve for fluff & flickers. Guess which category the pollies are in ?
Bob's time is now up. Arrogance will nett him retirement. He thought outside the square and will find himself outside the "house".
Get ready for the changeover folks.
Liberal Sate Govt's and (god forbid) Latham led Fed Gov.........?
One thing for sure, the fighting will continue.
Sad, very very sad indeed.
One thing I need to ask though, is all this retrospective such as IP's purchased before announcement remain sale Tax (2.25%) free....???
The discussion will expand I'm sure.
Thorpey.
Get ready for the changeover folks.
Liberal Sate Govt's and (god forbid) Latham led Fed Gov.........?
One thing for sure, the fighting will continue.
Sad, very very sad indeed.
One thing I need to ask though, is all this retrospective such as IP's purchased before announcement remain sale Tax (2.25%) free....???
The discussion will expand I'm sure.
Thorpey.
Rough Deal
I see it as having gouged the IP buyers on the way in, now they get them on the way out. More reasons to buy elsewhere than NSW.
At 4pm today I met with an agent managing as ale for a client and this ensured we do it before 1 July.
Regards, Peter 147
I see it as having gouged the IP buyers on the way in, now they get them on the way out. More reasons to buy elsewhere than NSW.
At 4pm today I met with an agent managing as ale for a client and this ensured we do it before 1 July.
Regards, Peter 147
Hi
Just for clarification, does this mean that any IP in NSW will now have an annual land tax of 0.4% - $100k land value = $400 tax ?
Is this some devious plot of the Gov to get investors to buy some of the oversuplied units instead of house & land packages. (if this was in conjunction with the Gov of S.A. I would be convinced this was the case. )
jahn
Just for clarification, does this mean that any IP in NSW will now have an annual land tax of 0.4% - $100k land value = $400 tax ?
Is this some devious plot of the Gov to get investors to buy some of the oversuplied units instead of house & land packages. (if this was in conjunction with the Gov of S.A. I would be convinced this was the case.
)jahn
Yes $400 per 100K; that is my understanding and reading of the transcript! And if/when you sell they government will put it hand out for another 2.5%!
Hi
Governments always try to get more tax and there is always some rationalisation, no matter how flimsy.
They reckon they will win more votes than they lose by playing the blame game (ie greedy landlords are responsible for high prices). The blame game is the politician's favourite way of diverting attention away from real problems.
The pollie gets to strut the stage pretending he's done something. The media gets a cheap headline or two and a few labels to apply (all they need when 'dumbing out' their readers).
But this will push up prices because buyers can afford more. Rents will rise inevitably because more taxes are being collected overall from the property sector. Property, like any other business must be profitable or perish.
Lplate
Governments always try to get more tax and there is always some rationalisation, no matter how flimsy.
They reckon they will win more votes than they lose by playing the blame game (ie greedy landlords are responsible for high prices). The blame game is the politician's favourite way of diverting attention away from real problems.
The pollie gets to strut the stage pretending he's done something. The media gets a cheap headline or two and a few labels to apply (all they need when 'dumbing out' their readers).
But this will push up prices because buyers can afford more. Rents will rise inevitably because more taxes are being collected overall from the property sector. Property, like any other business must be profitable or perish.
Lplate
Getting My Share of the $241 million??
I have not read all the links as yet. Although it appears the investor from day one will now be hit with Land Tax. No matter the value.
I already pay stacks of this so will need to re access / calculate etc if it is better or worse.
The greedy rich investors need another hit in the pocket. After Re-valuations, rate increases, land taxes, higher insurances, etc , etc.
But don't dare raise ya rents. ya bunch of Capitalists . Effecting good honest voters.
The overheated market needs to be culled. Then on the other hand the boys in Canberra are spruking what a wonderful job we have done . Unempolyment is soooo Low. Need we say property over last 4 yrs has had a little bit of flow on effect here. (5 yrs ago builders were driving old one tonners. Now even the apprentices are driving XR8 utes or SS Commodores) Flow on from building flows on & on through all areas from finance right down to a slab instead of a 6 pack.
Anyway i am going to see if I can get a bit of the $241 million allocated to mental health. Maybe we will all need it.
Geeeeeeee CeeeEEEE EEEEeeee
I have not read all the links as yet. Although it appears the investor from day one will now be hit with Land Tax. No matter the value.
I already pay stacks of this so will need to re access / calculate etc if it is better or worse.
The greedy rich investors need another hit in the pocket. After Re-valuations, rate increases, land taxes, higher insurances, etc , etc.
But don't dare raise ya rents. ya bunch of Capitalists . Effecting good honest voters.
The overheated market needs to be culled. Then on the other hand the boys in Canberra are spruking what a wonderful job we have done . Unempolyment is soooo Low. Need we say property over last 4 yrs has had a little bit of flow on effect here. (5 yrs ago builders were driving old one tonners. Now even the apprentices are driving XR8 utes or SS Commodores) Flow on from building flows on & on through all areas from finance right down to a slab instead of a 6 pack.
Anyway i am going to see if I can get a bit of the $241 million allocated to mental health. Maybe we will all need it.
Geeeeeeee CeeeEEEE EEEEeeee
Thanks AL. I guess it's no surprise that they have come up with another way to extract taxes, but what I can't believe is that someone who represents the people of the state of NSW can make this statement;
"Mr Egan said an overheated property market was not good for the economy, the community or for young people and families battling to buy their first homes."
What about the record low level employment built on the back of building industry.
The NSW Gov has had their fiscal backside covered for some time now due to the unexpected and unforcast property 'boom' windfall, and stamp duty revenue.
Without it, what sort of defecit figures would we have seen, and how quick do they react to blame someone (read anyone) else when things don't go to their plan
OK so he got 1 out of 3 right - "or for young people and families battling to buy their first homes."
jahn
PS - Can anyone help with the maths on this statement,
"The treasurer said the measures would raise $690 million a year and most of the proceeds would cover some of the $376 million lost in commonwealth grants."
So if we winge our backsides off on TV because we get shortchanged to the tune of $376 million, we raise taxes to the level of $690 million, and that will cover S O M E of the lost grants ? ?
Does not compute, or as someone else said it better a few years ago,
"Please explain"
jahn
"Mr Egan said an overheated property market was not good for the economy, the community or for young people and families battling to buy their first homes."
What about the record low level employment built on the back of building industry.
The NSW Gov has had their fiscal backside covered for some time now due to the unexpected and unforcast property 'boom' windfall, and stamp duty revenue.
Without it, what sort of defecit figures would we have seen, and how quick do they react to blame someone (read anyone) else when things don't go to their plan
OK so he got 1 out of 3 right - "or for young people and families battling to buy their first homes."
jahn
PS - Can anyone help with the maths on this statement,
"The treasurer said the measures would raise $690 million a year and most of the proceeds would cover some of the $376 million lost in commonwealth grants."
So if we winge our backsides off on TV because we get shortchanged to the tune of $376 million, we raise taxes to the level of $690 million, and that will cover S O M E of the lost grants ? ?
Does not compute, or as someone else said it better a few years ago,
"Please explain"
jahn
AAhh - so a slower sideways market with a few dips is a 'crash'. Thanks for the revised definitionspark said:
You'd better avoid SA, WA & QLD where property prices are still on an upswing in many areas. And avoid regional areas where it is still possible to achieve positive gearing (though larger deposits will make any metro property positively geared as well).
Spark,
I note that you personally rent. Are you also one of the investors you reckon has been 'seduced and trapped' by the government? Or have you managed to avoid the trap by not holding any IPs?
Note that selling IPs to enter other investments is rarely a good strategy, whether there are selling costs or not. The better approach is refinancing. You pull out the extra equity & invest it wherever you like.
There are some flaws in your Citibank example you should consider - tax on interest, banks fees & charges - which make that $86K less than $50K in practice. AND you don't buy the property in Mosman by paying the entire $1.6M!!!!! You use leverage to buy at 1:20 (95% lend).
Do the numbers a bit deeper & you'll find that even at 3-5% annual capital growth over the next 10 years, owning in Mosman using the leverage (even at 60%) is significantly better than putting cash in bank.
Cheers,
Aceyducey
Topped Out. Unless ya don't eat
I think at this point of the cycle many 1st home owners are topped out as to what they can afford.
Even with No Stamp Duty.
Interest rate rise and high prices top out many people.
Unless they give up eating.
With financial burdons pushed to paying off high mortgages proportions of divorces / separations rise. Anyone agree?
Then desperate sales occur. Sad but true.
Agree or disagree
I think at this point of the cycle many 1st home owners are topped out as to what they can afford.Even with No Stamp Duty.
Interest rate rise and high prices top out many people.
Unless they give up eating.
With financial burdons pushed to paying off high mortgages proportions of divorces / separations rise. Anyone agree?
Then desperate sales occur. Sad but true.
Agree or disagree
Yet even more reason to piss off overseas.
Firstly one of the highest tax rates in the world, after paying nearly 50% tax on earning whatever's left is then taxed at 10% GST on the building cost of the house you are buying. At the same time you pay $10k stamp duty on a $300k flat.
Then would be paying yearly land tax out of already heavily taxed income.
At the same time you are supporting an extremely low yielding housing market (that the government won't and prefers us to do) providing housing with negative cashflow while renters enjoy some of the lowest rental costs.
Then if heaven forbid you wish to sell the property pay another 25% CGT tax, PLUS another stamp duty tax on top of that.
THEN with the leftover money you will get taxed again, GST or stamp duty etc depending on what you spend it on.
Glad I moved to UK. I want to come back one day, but now I don't know now. Highly skilled migrant visa works for me and many other skilled people who are fed up and leaving this country. Australia risks becoming a banana republic once again if the government keep on wittering away at the small rewards of those who have the discipline to make the sacrifice to lifestyle that is investment. By investment I dont just mean money I mean time, study, education as well. When the time comes to reap the reward for your effort the time also comes to put your hand in your pocket big time for the government. Even though you are paying off all those student credit cards, HECS debts etc you still must pay your slug in huge taxes. Forget spending money, let's support everyone else for them.
hahaha just letting off some steam guys, I know we won't become a banana republic, I know we have to pay tax (even though it's taxes on taxes on taxes).
It will be real interesting though to watch the market reactions. The market is king, in the long run supply and demand rule. What the government take from one hand will flow back into our other hand - be it through higher rents or increased capital gains due to restricted long term supply.
And I'll never sell, I'll never give up my property mwahahahaha *evil laugh* and take my debts to the grave.
ps New Zealand is looking good - very favourable taxation indeed (especially compared to Australia).
Firstly one of the highest tax rates in the world, after paying nearly 50% tax on earning whatever's left is then taxed at 10% GST on the building cost of the house you are buying. At the same time you pay $10k stamp duty on a $300k flat.
Then would be paying yearly land tax out of already heavily taxed income.
At the same time you are supporting an extremely low yielding housing market (that the government won't and prefers us to do) providing housing with negative cashflow while renters enjoy some of the lowest rental costs.
Then if heaven forbid you wish to sell the property pay another 25% CGT tax, PLUS another stamp duty tax on top of that.
THEN with the leftover money you will get taxed again, GST or stamp duty etc depending on what you spend it on.
Glad I moved to UK. I want to come back one day, but now I don't know now. Highly skilled migrant visa works for me
and many other skilled people who are fed up and leaving this country. Australia risks becoming a banana republic once again if the government keep on wittering away at the small rewards of those who have the discipline to make the sacrifice to lifestyle that is investment. By investment I dont just mean money I mean time, study, education as well. When the time comes to reap the reward for your effort the time also comes to put your hand in your pocket big time for the government. Even though you are paying off all those student credit cards, HECS debts etc you still must pay your slug in huge taxes. Forget spending money, let's support everyone else for them.hahaha just letting off some steam guys, I know we won't become a banana republic, I know we have to pay tax (even though it's taxes on taxes on taxes).
It will be real interesting though to watch the market reactions. The market is king, in the long run supply and demand rule. What the government take from one hand will flow back into our other hand - be it through higher rents or increased capital gains due to restricted long term supply.
And I'll never sell, I'll never give up my property mwahahahaha *evil laugh* and take my debts to the grave.
ps New Zealand is looking good - very favourable taxation indeed (especially compared to Australia).
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