....hahaha....credit weiners....mate, you clowns take it sideways.
qed........
what makes property price in Australia (Sydney in particular) overpriced ?
- Thread starter albertwt
- Start date
qed........
I assure you I was paying attention: Just checking for dissimulation, that's all, because of the no-less weird dichotomy among advocates of the removal of NG that "It's in the interests of a fairer taxation system" vs "It's in the interests of a fairer distribution of housing".
Excellent.
I would point out that arguing against ng from both a tax and housing policy perspective is no dichotomy; they're interconnected as distinct from contradictory.
Just sayin'
Really?
Following Isaiah Berlin, I would have said one agenda pursues equality of opportunity, while the other agenda pursues equality of outcomes, with each deriving from quite contradictory concepts of personal freedom indeed.
Just explainin'.
This seems like a somewhat fair proposition. I'm not sold on the idea yet but can see the merits.
Some what-ifs;
What if NG stayed in place for building new dwellings or qualifying "in-fill" developments?
What if NG stayed in place for NRAS style developments? (more controlled variation of the 1st what-if)
I think both might help to act on the supply side of the equation and keep the government out of directly having to provide public housing, which is always a bad idea. Investors would be strongly incented to focus funds on these areas. I am thinking it would also support the building and construction industry. I am sure there are downsides.
I wonder how the banks would react in assessing serviceability? I know many of them take into account the effect of NG when calculating. Some still undervalue NRAS.
Bonus points for the gratuitous shout out to Mr Berlin...deductions for relevance.
NG hasn't proved to have any value on the supply side...even today a greater % OOs build new stock than investors. Unfortunately, state and local governments continue to both limit limit and and add materially to the cost of supply and, ideally, you would see a transfer of the Cwlth upside from removing NG to the lower tiers of govt. to reduce their dependance on property and development taxes/levies.
Just as I thought: Confronted with the fact that you're re-presenting your own personal political agenda as simply rational tax policy, you resort to character aspersions.
Utterly shameless!
As much as I enjoy the word games, do you have an actual view on the subject?
In a sensible system your early losses would be carried forward and deducted from any subsequent capital gain.
Given your heartfelt concern for the ATO' you will pleased to know that this is a far better deal for them
There are a number of fundamental errors in your suggested 'sensible' framework.
Firstly, you suggest that early losses formerly countered by NG would be applied against future capital gains in a 'sensible' system? Would these losses be indexed at the rate of inflation or would it be a case of the ATO saying in 2042 "Well you had $21k of losses back in 2011 until your property became cashflow positive, so we will deduct that $21k you incurred over 3 decades ago from the CG derived from the $5m selling price"? Surely you are aware of the absurdity of this type of arrangement on either count.
However in any case if you are of the belief that such an arrangement is 'sensible' you would of course admit that logic would dictate that losses claimed on a negatively geared property in a financial year have a direct relationship with tax paid on CF+ property in a financial year.
Consequently under your 'sensible' tax system, all rental income derived from property would have to be carried forward and paid as a lump sump upon the sale of a property as a CG tax top up. Guess what? If the property never gets sold, property investors never pay any tax on their rental income. Just as investors would only be able to claim their losses if they sold their property right?
Fantastic, bring it on and have fun with your subsequent supply and affordability issues. No incentive to sell and a massive incentive to generate tax free rental income would make property boom like you would not believe- it is far more lucrative than any short term NG benefits, what an amazing haven for wealthy Australians to park their cash!
If you are attempting to apply balanced tax policy, the above solution is the only way to justify extinquishing NG in the way you have suggested otherwise your position can be established as nothing more than anti-property investor propaganda and let's face it, your suggestion would pose a lot more problems than it solves
Not absurd...your initial purchase price isn't indexed either. Are you suggesting it should be?
Though it is more complex, it would be more than possible to allow losses incurred over one asset to be offset against profits made over other assets of the same class. I don't have any particular objection - the primary issue around NG is the ability of offset losses against income where the former is not connected with the latter.
That said, adding to the capital base would be more simply administered.
You've missed the point or don't understand NG. It is only the costs in excess of income that are carried forward.
See previous
If you are attempting to apply balanced tax policy, the above solution is the only way to justify extinquishing NG in the way you have suggested otherwise your position can be established as nothing more than anti-property investor propaganda and let's face it, your suggestion would pose a lot more problems than it solves
Straw man.
Yet, currently, you can deduct depreciation today and not have to 'pay it back' until you sell the property, and it's not indexed, and you get a 50% CG discount. So you can claim 21k in depreciation in 2011, sell the property in 2042 and the ATO says 'you claimed 21k depreciation back in 2011, so we'll deduct the 21k you incurred 3 decades ago from the cost base used to calculate the CG.' Even if the current selling price is 5m.
Absurdity is not always an impediment to tax law.
NG has little effect on the supply side while it also applies to existing dwellings.
It has only a secondary effect as property prices rise generally development becomes more lucrative, but the government then has its way with levies, aneamic land release and red tape to ensure the supply side does not get too carried away.
I think though even with the impediments you describe above, if negative gearing was only applied to new properties it would have a dramatic effect on the supply side as it gives new supply an advantage over existing dwellings boosting the value of new supply allowing developers to bring on currently more marginal development projects.
It would have an opposite effect of say a 350k per hectare state gov levy on new development or a 20k per block council contribution things that currently make much development futile.
Similar to the FHOG, it should have been on new homes only. The only place the GST is actually levied. Why put a boost on for existing homes when no GST is levied on them? I actually think what QLD is doing now with 10k for new homes only is a good idea.
It would only go a small way to combating the innefficiencies in this country around development but at least it is moving in the right direction after years of running the other way; governments wringing their hands about affordability and then putting a new tax on development with one hand and giving certain classes of buyers a grant with the other! NSW stamp duty concession on new builds is another decent policy so is the boosted grant to new homes in Vic that at least targets the right side of the equation with some effect.
These are policies that actually achieve what they say they will achieve; more supply and therefore less requirement for welfare housing. Giving NG on all homes does not, neither does grants for purchasing all homes or renting homes out of existing stock by gov or buying them for social housing is even worse.
Example of stupid tax treatment being counter productive for development:
As a private buyer (I mention this because developers I imagine get to write interest off as a business expense in the same year they make a quid even if it is just land?) I have been looking at a fairly speculative development lot. So if I was buying a run down shitter house on it to ride with inflation I could get negative gearing or live in it myself and avoid land tax and cg's if they come about but am not adding to supply.
contrast this to if I actually want to develop it;
On an acreage on the fringe of Sydney I buy said block, I pay full interest with my after tax income about 40% more than if I could negative gear it. I pay land tax. I get absolutely no relief whatsoever even though my intention is to actually add supply, a worthy cause surely?
If I get over the line on the development I pay 350k per hectare to NSW gov, nearly 20k per block to local council then on the added value component 10% GST levied from buyers. You can see why it would be easier (If it did not have a amalgamation order over it!) to just build a single dwelling on it, live in it, avoid land tax or rent the dwelling out and negative gear it into the future till the government has brought infrastructure to the area, i.e. speculate on future value rather than develop it now.
The taxation treatment in this country seems to encourage speculation and holding rather than development activity. then they ask why are so few building houses? They slug potential part time developers with land tax, levies, no relief from interest charges against income etc etc.
Quite.
State and local governments are addicted to property taxes and levies for both existing stock and new developments, but the added costs to the latter are obscene. When homebuyers on the fringe suburbs are being asked to pony up for 20 years of infrastructure costs, it's little wonder those blocks cost a fortune.
No, I am suggesting that it is a ridiculous suggestion and your ideas are unneccessarily complicated and founded on a false methodology.
Exactly, most Australians have been craving a more complex tax system, you should contact the ATO and pass on your suggestions.
I am abundantly aware of the concept of NG, I have applied it for many, many years. Your suggestion is that any net loss (rental income- interest +rates +strata etc.) incurred before the property is CF+ could be claimed only once a property is sold. My argument is that this is fine as long as any net rental income (as distinct from Capital Gain) is also treated in the same way. It's quite simple logic really.
Bottom line, eliminate NG and eliminate tax paid on CF+ property or leave it the way it is.
