Negative gearing, not what I thought it was.

[boods99]

It's been covered before but (according to BANTACS www.bantacs.com.au) the ATO are within legislation to reduce the cost base of your property by the amount of depreciation, regardless of whether you claim it or not.

So you might as well do it!!!

Can anyone clarify that the ATO actually do this, or if there are just provisions under the relative legislation to do so? If they don't do it all the time, what would be the trigger?
Bit Confused Now!!!!

Boods

 

[depreciator]

Boods,
This is another one of those topics that come up regularly:

http://www.somersoft.com/forums/showthread.php?t=48209

 

[The Wild One]

What surprises me, is I'm not hearing the fact you don't have to own dozens of properties to get all your tax back, or pay tax depending on your employment situation.

I often hear the quote, "But you can claim it on your tax". That's not exactly true. If you have multiple ip's, your probably claiming more than your paying anyhow?

 

[ianvestor]

I find that a really bizarre statement on two levels. But it boils down to your opinion that wealth is a relative measure. I may be different, but my wealth is to do with my objectives and measures, and has squat to do with what other people have.

It actually does have quite a bit to do with it... imagine if suddenly every individual in Australia except you gets an extra $1 billion in their bank account, but you still have the same 'wealth' as now.

Do you think you'll be able to afford to drink milk at $90,000 per litre?

 

[Perp]

It actually does have quite a bit to do with it... imagine if suddenly every individual in Australia except you gets an extra $1 billion in their bank account, but you still have the same 'wealth' as now.

Do you think you'll be able to afford to drink milk at $90,000 per litre?

You're right at this extreme, ianvestor, of course.

But any changes to tax rates would be comparatively modest; at most tax rates would go up by, say, 1 or 2%. Therefore:

1) only the most heavily negatively geared people wouldn't end up paying more tax overall anyway, and

2) the added expense to the people paying full tax would be relatively trivial, but still far more significant to them (in detracting from their wealth) than in adding to the relative wealth of people who don't have to pay that added expense. ie the effect is trivial.

It just seems mean-spirited to say that you should be happy if all your family and friends each lose $1,000, because you'll gain $100.

 

[ianvestor]

It just seems mean-spirited to say that you should be happy if all your family and friends each lose $1,000, because you'll gain $100.

Yeah, my point was that every time you buy something (even as simple as 1L of milk), you're in competition with other buyers. That's what it makes me think of when people say gaining wealth has nothing to do with other peoples' wealth ('not a competition').

Maybe today I want to buy a lawnmower and so do all my neighbours, but the local store only has 2 mowers left...

 

[splade]

A little off topic, but someone mentioned earlier in the thread the if a property was in a trust then it is also 50% CGT exempt, just like my PPOR. is this just for the first property in the trust? or for all of them? and why would being in a trust make them discounted CGT?

 

[Jonathon]

Hi Splade

I think you're confusing the 12 month 50% CGT exemption with the 100% PPOR exemption.

If you hold an asset for 12 months, whether personally or in a trust you only pay CGT on half the gain.

Your PPOR is completely CGT free, no matter how long you've held it.

Cheers
Jonathon