When is Paul Henry's tax review due?

[ozfutures]

Ken Henry reforms - negative gearing may well remain

I have decided to hold off on purchasing IP #3 and #4 in fear that negative gearing might be abolished. Not only that, but it may be that stamp duty might be abolished. Either way, I dont think its smart to buy a property now just to have the "rules" change on us again.

Does anyone know when this review is due for submission and publication?

Quick answer: report is due by end of 2009

Snapshot this far:


Negative gearing may quite remain

House tax changes unlikely - article posted on ABC net, 17 Aug 09

He (Dr Michael Dirkis, senior tax counsel at the Taxation Institute of Australia commenting on Dr.Ken Henry's reform) also thinks it is unlikely that the deductability of interest repayments, or negative gearing, will be under threat, and says the review is more likely to recommend policies that encourage equity investment, rather than changes that discourage the use of debt financing.

"We still import a fair amount of our capital, so we've gotta make sure that the outcome for the investor is equally as good on either way of entry into the country," he said.

Dr Durkis says the last time negative gearing was restricted it triggered a massive outcry from the investors claiming deductions, particularly housing investors.

Ken Henry was also keen to hit another housing taxation rumour published in the press on the head in a question and answer session after his speech.

"There's a reference there to us possibly considering applying capital gains tax to the owner occupied house, well, I don't think there was anybody in the country was more shocked to learn about that on Saturday morning than me," he said.

"It was pure fiction."

Source: http://www.abc.net.au/news/stories/2009/08/17/2658426.htm

 

[TheAnalyst]

I believe negative gearing is a very bad thing for the property market, for people with low or no income because of the way how it was implemented. This is another reason why I sold 5 of my 6 IPs. Another one is on the market at moment. It should be abolished. It is an unfair policy.

 

[josko]

I believe negative gearing is a very bad thing for the property market, for people with low or no income because of the way how it was implemented. This is another reason why I sold 5 of my 6 IPs. Another one is on the market at moment. It should be abolished. It is an unfair policy.

Are you serious?

No, you can't be.

Regards JO

 

[VYBerlinaV8]

I believe negative gearing is a very bad thing for the property market, for people with low or no income because of the way how it was implemented. This is another reason why I sold 5 of my 6 IPs. Another one is on the market at moment. It should be abolished. It is an unfair policy.

What does a person's income have to do with this? If they're on low or no income they probably can't afford a house anyway.

 

[sanjayag]

I believe negative gearing is a very bad thing for the property market, for people with low or no income because of the way how it was implemented. This is another reason why I sold 5 of my 6 IPs. Another one is on the market at moment. It should be abolished. It is an unfair policy.

Analyst,
If you read "Rich Dad Poor Dad" book, you will get the answer to this unfairness. The taxes were introduced into the economy to punish the rich by charging taxes and spend it on the well being of the poors. But being smart and financially educated, rich found the other ways to ignore tax, one of the way is to invest your income.

 

[TheAnalyst]

Are you serious?

No, you can't be.

Regards JO

I am serious. I believe it is an unfair policy and disturb the property market. There are a lot of these implications of NG policy. I had a discussion with a tax officer - they said that was the way it was set up. I believe it should be abolished.

 

[TheAnalyst]

Analyst,
If you read "Rich Dad Poor Dad" book, you will get the answer to this unfairness. The taxes were introduced into the economy to punish the rich by charging taxes and spend it on the well being of the poors. But being smart and financially educated, rich found the other ways to ignore tax, one of the way is to invest your income.

I have read several books of his. I think the best is guide to investing. A lot of things he talked about was not relevant to Australia's practice.

 

[Sheryn]

I believe negative gearing is a very bad thing for the property market, for people with low or no income because of the way how it was implemented. This is another reason why I sold 5 of my 6 IPs. Another one is on the market at moment. It should be abolished. It is an unfair policy.

The Analyst - A question for you..

If the Government does away with negative gearing on rental properties who is going to build and supply houses, units etc for low income earners to live in?


Therefore you have sold 5 properties that had been rented out to low income earners OR people who could not save a deposit OR to people who are not interested in purchasing their own house or unit.

Did any of the IP sold sell to a housing co-operative that rents out to low income earners?


Regards
Sheryn

 

[Graemsay]

If the government wants to raise tax revenue then eliminating negative gearing is an easy way to achieve this. And it might become very attractive if the public finances deteriorate rapidly, particularly if the Global Financial Crisis hits Australia.

Look at the figures: Investors pay approximately $25 billion towards mortgages per annum, whilst collecting $19 billion in rent. A shortfall of $6 billion, or nearly $3 billion claimed back in negative gearing.

There's been concern about rapidly rising house prices, and the potential damage that is done if a bubble pops. Reducing tax breaks for speculation (and a lot of NG investments strike me as a gamble on future price rises) might be a politically easy thing to do.

Plus it could be spun as a way of taking heat out of the market to allow "hard working first time buyers" a chance to buy instead of "greedy investors".

 

[lizzie]

the rules in regards to taxes and investing are changing all the time. all one can do is deal with the rules at the time, ensure the figures stack up and stay within their affordability to service range.

taxes ... it is what it is, what it is, what it is.

i am sure the list is endless - but over the last 30+ years we've come off the gold reserve, cg has been removed (and put back), had a couple of recessions (miles worse than then earlier this year), interest rates up to 20%, gst introduction ... yet those who continued to invest "wisely" thru these times have come out rather wealthy.

as someone pointed out - if you don't invest because of a fear of the rules changing then you'd never put any money in super.

 

[TheAnalyst]

The Analyst - A question for you..

If the Government does away with negative gearing on rental properties who is going to build and supply houses, units etc for low income earners to live in?


Therefore you have sold 5 properties that had been rented out to low income earners OR people who could not save a deposit OR to people who are not interested in purchasing their own house or unit.

Did any of the IP sold sell to a housing co-operative that rents out to low income earners?


Regards
Sheryn

Thanks for asking:

1 - Property investing should be designed as an investment - have a return. Where NG makes a loser's game if there is no CG.
2 - NG make Kevin Young's TIC more propaganda than anything else. Those with little understanding and knowledge gamble on the property for CG and reduce their tax. It has caused huge bubble. Last few years, if you have not bought IPs, you would be crazy.
3 - I used to have 11 IPs and before last year, I sold down to 6 and got rid of 5 of these 6. If not the low rate and $21k, I do not think I could have off-loaded them. All of them used to rent. When they worked out ($21k, 5% rate, 100% Keystart loan), they found it was cheap to own a house than renting. That was where the bubble started. The K Rudd and state government gave them too much money and make them think they would be stupid if they do not buy one. Key Start Loan in WA have huge dealys in loan approval and settlement. If RBA make the cash rate 5% - those people might wake up.

4 - sold all to individuals. I believe if standard RBA rate rise to 6%, there will be significant mortage sale.

 

[Ausprop]

I agree Analyst - renters get a free ride at the expense of taxpayers. I pay for my house - why should I ahve to pay for someone esles as well? Let the market decide what is a true rent! Low income earners shouldn;t be livingin the taxpayer subsidised luxury that they are currently in. All this market intervention needs to be axed, yields corrected and order restored.

Rent in a balanced market should be twice what it is currently.