Negative Gearing

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  1. #201
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    Quote Originally Posted by johnc View Post
    Absolutely, and so they should, of course.

    Actually that is going to be the next hurdle, as solar pv gets greater penetration the burden of high power prices will eventually fall on those who can least afford it as well as those is social housing in particular and renters in general. There are some tentative steps to make changes in this area but nowhere near enough is being done for that group. The panels have really got to the point where you could remove subsidies and restrict government rebates to those on low incomes with interest free loans they can pay back out of the savings. Again there are some efforts there but not everyone can access them.
    But they are usually renting. So more tax breaks needed for the landlord to provide solar PV on their investments!

    And also incentives to not charge more rent based on the power bill savings renters will 'enjoy'.

  2. #202
    4K Club Member Marc's Avatar
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    Quote Originally Posted by chrisp View Post
    .... Fascinatingly, just about everyone would consider themselves to the ‘hard working’ - and I do agree that on the whole that they would be correct (and I suppose that why it is sort of a motherhood statement!). However, ‘hard working’ has somehow become synonymous for ‘success’ (or read it as ‘wealth’ if you prefer) and has a connotation that the ‘unsuccessful’ are not hard working. This is a false dichotomy as there are people who are indeed hard working but aren’t successful, as there are people who don’t work hard but are successful.

    So, back to that elephant...

    What ‘hard work’ did Jill do to earn her extra $350,000? What work did she do that contributed to her extra wealth. The pragmatic answer is that it is just how the system works, good luck to her, and anyone can participate if they wish.

    But the real question is - why does she need a tax-payer subsidy?
    Chris ... you will need to define "hard work" and understand that hard work does not lead to success. Most likely the opposite is true. Hard work as in long hours at a menial or high stress job, only isolates the person from opportunities and the bigger picture, that is required to be seen in order to establish a successful strategy.

    Politicians love to talk about hard work and prise the hard worker because that is what the hard worker likes to hear, and rightly so.
    The cost of hard work (generalisation only mind you) is, as i said before, isolation from essential information, and the development of an "us and them" mentality that further alienates the hard worker in question.

    Economic success requires access to large chunks of time, to perform mostly unpaid work in order to get the business started, access to capital or good credit and much more. It is this enormous opportunity cost that has to be counterbalanced by a larger than average chance of returns ... and the reason all intelligent government, not weighted down by marxist ideas of populism, encourage and facilitate all the functions required for business to prosper.
    Prosperous business pay taxes and allow government photo opportunities, pretending it is their money they "give" to those they believe worthy of "their" largess.

    What you are missing with your late rhetorical question, is that negative gearing is not a subsidy but a tax principle, not to tax the cost of producing profits.
    The tax reduction after one year of tenure, has a dual purpose. To reduce the time between purchase and sale, rooting out quick flips, and also stimulate the interest for investors, that need large profits to offset large risk and the very large personal cost of doing business.

    Only someone alien to what requires to be successful in business can look at someone who holds a property for 20 years and make some money with envy. 100% or 200% in 20 years is in fact a joke in any real business situation and only attracts the amateur.
    Many would be horrified at the realisation that 1000% plus is the norm for many business in terms of one or two years.

    Is this "wrong"? Certainly in many people's mind it is, as I have found out over decades of running personal development courses.
    For many years i have told folks that every person has a number floating above their head, representing what that person thinks it is "right" to earn. That figure is astonishingly small, and surprisingly easy to find out.
    Even more surprising is to find how hard it is to tell people that it is their handicapped aspirations that hold them back.
    The biggest argument people use to defend their ideas about theirs and other people's earnings ... mostly other peoples, is that the other's apparent excess earnings is immoral, or realised at the expense of themselves and other equally "exploited" people.

    What follows is of course that there is a background noise of "tax the bastards" and some out of tune and ignorant government, due register that noise and act accordingly killing the golden egg goose.

    Bottom line, all business need stimulus in different forms. Make he business flat and dull and profits dry out, not enough tax so others need to pay more.
    Catch 22. The idea that the pie is limited, you know the say, only so much to go around, is false. The pie is in fact infinitely large because it depends from you and me and we can make it as big as we want ... and the government allows ... and if here is no good, there is always somewhere else.
    “It is not necessary to accept everything as true, one must only accept it as necessary”
    Franz Kafka

  3. #203
    The Master's Apprentice Bedford's Avatar
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    Quote Originally Posted by chrisp View Post
    So, back to that elephant...

    Originally Posted by chrisp

    To summarise, the 10-year investment has cost Jill 10 x $9,450 = $94,500. The gain is $441,786 (= $517,786 - $76,000) after tax. A net gain/profit after-tax and costs of $347,286.
    If the 50% capital gains tax discount didn’t exist, Jill’s income for the year would have been $655,462 (= $76,000 + 579,462) and she would pay $268,055 in tax (plus MC levy, etc,). A take home income of $387,407. After deducting the costs over ten years, this corresponds to a net gain/profit (after tax) of $216,907.


    What ‘hard work’ did Jill do to earn her extra $350,000? What work did she do that contributed to her extra wealth. .
    Maybe she did the maintenance on it , or?

    Quote Originally Posted by chrisp View Post
    But the real question is - why does she need a tax-payer subsidy?
    Maybe she doesn't, did you need a subsidy for solar panels?

    There is no elephant in the room, it just looks that way to you as you don't know what you're talking about.

    Chris I tried to help you understand what you're banging on about when you first posted the quote above, but you chose to ignore me.

    You have put together a few numbers to suit your own agenda and left 90% out.

    Considering just how many property investors are on this forum, I think what you're stating is just making you look silly to a whole lot of people.
    Posted by John2b, And no, BEVs are not going to save the planet, which doesn't need saving anyway.

  4. #204
    1K Club Member UseByDate's Avatar
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    Quote Originally Posted by Cecile View Post
    CGT isn't one of my main tax topics any more but there are indicators of when you're an investor and subject to CGT, and when you're a property developer (ie, in business.) Serial renovators MAY be classified as being in business, in which case their projects may be considered "trading stock." Totally different methods of claiming deductions, GST registration may be required. Even a single development could be considered an isolated transaction and subject to GST registration and other "am I in business" rules. Trust me when I say that a lot of people get this wrong, and end up audited and subject to very large fines and penalties. Claiming "I didn't know" is not a valid excuse.

    Main residence CGT exemption can only apply to a single property at a time, and there are certain criteria that you have to meet.

    In all honesty, it's a very complex topic and best left to the experts.
    Main residence CGT exemption can apply to two properties at a time for a period of up to six months.


    https://www.ato.gov.au/general/capit...ain-residence/
    “Moving to another main residence

    If you acquire a new home before you dispose of your old one, both dwellings are treated as your main residence for up to six months if:

    • you lived in your old home and it was your main residence for a continuous period of at least three months in the 12 months before you disposed of it
    • you did not use it to produce assessable income (such as rent) in any part of that 12 months when it was not your main residence
    • the new dwelling becomes your main residence.

    So if you sell your old home within six months of acquiring the new one, both dwellings are exempt for the whole period between when you acquire the new one and dispose of the old one.”
    “What a fool believes, he sees. No wise man has the power to reason away”- The Doobie Brothers

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