staringclown

Talks test the water on negative gearing change

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Talks test the water on negative gearing change

THE Gillard government has sounded out unions over steps to cool Australia's housing market, with measures that range from a new sales tax for investors sitting on large property portfolios, to curbing the popular strategy of using negative gearing for multiple properties.

Senior federal Labor figures and key union backers are believed to have discussed the plan as a way to tackle housing affordability. Details of the proposals, which would apply to home owners with two or more investment properties, have not yet been developed. The talks come before a tax summit planned for later this year.

A spokesman for Treasurer Wayne Swan declined to comment. The Age believes no plans are in place for the coming federal budget.

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If implemented, the moves would mark some of the biggest changes to property tax in nearly two decades, particularly in tackling the politically thorny issue of negative gearing, which provides billions of dollars of tax breaks to millions of Australians.

But to reduce political risk, the changes have been designed to target only the wealthiest property owners, leaving those with one investment property untouched.

Edited by staringclown

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THE Gillard government has sounded out unions...

what a relief! :frusty:

But to reduce political risk, the changes have been designed to target only the wealthiest property owners, leaving those with one investment property untouched.

because everyone should have one :rolleyes:

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because everyone should have one :rolleyes:

Indeed. So the people they want to target are those that can be realistically considered professional landlords, and leave alone those who are probably highly leveraged and claiming a lot of tax against their other income.

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It makes more sense than re-introducing full CGT when houses aren't selling.

Also, this whole 1 house thing could be to save FHBs from 2009 - how many of them do you recon are now NG their first home purchase (living back with mum and dad or enting themselves)?

Edited by ummester

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i doubt it will happen, and if it does it won't happen for some time. but if this gets enough play in the media it may be enough to persuade investors to start offloading some of their properties now rather than later.

my guess is that they will begin the discussion as a sop to affordability but as prices continue to drop they will table it because they don't want to be seen destabilising an already shaky housing market.

let's face it, when has this gov't and it's previous incarnation shown the political will to do anything controversial?

still, it's "useful" as it creates yet another layer of uncertainty for the highly leveraged investor. even if you only own one IP, knowing that people with multiple IPs might be pushed to start dumping them on the market has got to be a bit worrying.

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Also, this whole 1 house thing could be to save FHBs from 2009 - how many of them do you recon are now NG their first home purchase (living back with mum and dad or enting themselves)?

I doubt that many are so desperate that they would be enting themselves. Next year perhaps.

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I doubt that many are so desperate that they would be enting themselves. Next year perhaps.

I meant renting:) But they could be changing themsleves into big Tolkienish trees, couldn't they:)

Just read the macrobusiness article on this and it raises a good point. Unlikely to happen but if this is something the government is willing to let the populace know they are thinking about, chances of more housing stimulus are slim. The housing market may actually be left to do it's own thing - which in Australia is a truly frightening prospect.

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Labor will succeed shooting itself in the foot over this yet again. Rising rents and the sounded out unions will go haywire.

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Labor will succeed shooting itself in the foot over this yet again. Rising rents and the sounded out unions will go haywire.

Keating will probably whisper a few words in Swan's ears on how good it was for him!

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Sounds unbelievable given the government's mentality during the FHOG boost. Has Tanya Plibersek been shoved into a concrete mixer? Maybe they've been looked at the reader blogs and decided which way the wind blows.

By the way changes to capital gains tax would be far more effective in curbing mindless speculation and would not leave a hole in the revenue budget.

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This is just an internal investigation as to how to increase taxation without pissing off too many people. It is not genuine reform and if they get scared they'll lose too many votes then they'll just sell more bonds and kick the can down the road a little further.

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I meant renting:) But they could be changing themsleves into big Tolkienish trees, couldn't they:)

Just read the macrobusiness article on this and it raises a good point. Unlikely to happen but if this is something the government is willing to let the populace know they are thinking about, chances of more housing stimulus are slim. The housing market may actually be left to do it's own thing - which in Australia is a truly frightening prospect.

it's all gossip so far...

are believed to have discussed the plan as a way to tackle housing affordability.

A spokesman for Treasurer Wayne Swan declined to comment. The Age believes.

this type of thing is a common to sound out the situation. if you want to dump controversial news; today is the best day of the year to do it. the media practically shuts down for 4 days.

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Maybe they've been looked at the reader blogs and decided which way the wind blows.

... which makes it even more frustrating that the Age/SMH have opted against allowing comments on the 'article' :angry:

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By the way changes to capital gains tax would be far more effective in curbing mindless speculation and would not leave a hole in the revenue budget.

i'd agree.

do you propose a return to indexed gains?

i'm not sure if you were in oz in the late nineties when cgt changed to what we have now. before 99(?) the cost base was indexed to inflation. the gain was then divided by 5 (adjusted gain). tax was calculated at the marginal rate of the adjusted gain and multiplied by 5. clear as mud.

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i'd agree.

do you propose a return to indexed gains?

i'm not sure if you were in oz in the late nineties when cgt changed to what we have now. before 99(?) the cost base was indexed to inflation. the gain was then divided by 5 (adjusted gain). tax was calculated at the marginal rate of the adjusted gain and multiplied by 5. clear as mud.

In Europe (generally) they penalise anybody who sells the investment property within 5 years with much higher cgt. Since speculators can't look beyond that horizon, it stops them in their tracks. Its very effective. In 2002 when brainless speculation was out of control, most of the investors were looking to churn again before the end of the 'cycle' ie probably the same year. But even a return to the pre-2000 rules would be better, the halving of the tax after that put petrol under the churners.

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because everyone should have one :rolleyes:

Because those who would vote on it almost all have one in Canberra and one in their electorate. <_<

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There are 1.7 million property investors in Australia (add a complicit partner/spouse factor and say 3M).

of-property-investors.jpg

There are around 13M voters in Australia. How many are renters? In Census 2006 2,064,000 dwellings were rented (27% of dwellings). Average dwelling size was 2.6 people. Not accounting children can we say 4M renters?

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i'd agree.

do you propose a return to indexed gains?

i'm not sure if you were in oz in the late nineties when cgt changed to what we have now. before 99(?) the cost base was indexed to inflation. the gain was then divided by 5 (adjusted gain). tax was calculated at the marginal rate of the adjusted gain and multiplied by 5. clear as mud.

The division and multiplication by 5 never happened.

Everything else is correct. Indexation was abolished for new investments after Sep 1999.

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There are 1.7 million property investors in Australia (add a complicit partner/spouse factor and say 3M).

of-property-investors.jpg

There are around 13M voters in Australia. How many are renters? In Census 2006 2,064,000 dwellings were rented (27% of dwellings). Average dwelling size was 2.6 people. Not accounting children can we say 4M renters?

+1

Unions won't care about multiple property investors. These are high wealth individuals. The article only speaks of removing NG for these people. They may not introduce it after all but it is definitely a chance. If it is limited to those mum and dad union members investors that only have one.

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+1

Unions won't care about multiple property investors. These are high wealth individuals. The article only speaks of removing NG for these people. They may not introduce it after all but it is definitely a chance. If it is limited to those mum and dad union members investors that only have one.

Like any other arbitrary cap/limit/threshold this is a bad idea on equity grounds and also because it will be structured around.

If they put this in, I predict that leveraged leasing partnerships will become popular in the infestor universe.

From the perspective of crunching/saving the bubble it probably won't matter - in the US deductibility of mortgage payments didn't save them.

I predict that in the budget they will cut the budget of a few bullish!t/random/periphery departments but not make any changes that go to the core of anything like

- middle class welfare

- tax

- health

Edited by Peachy

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Like any other arbitrary cap/limit/threshold this is a bad idea on equity grounds and also because it will be structured around.

If they put this in, I predict that leveraged leasing partnerships will become popular in the infestor universe.

From the perspective of crunching/saving the bubble it probably won't matter - in the US deductibility of mortgage payments didn't save them.

I predict that in the budget they will cut the budget of a few bullish!t/random/periphery departments but not make any changes that go to the core of anything like

- middle class welfare

- tax

- health

Well I don't disagree. I'm just not sure at the moment what they'll do. Looking at the proposed public service cuts they will squib. I also agree with you on the discriminatory nature of the change.

However I see it as a transitional arrangement, the "thin end of the wedge". Like when they reintroduced tertiary education fees. Student "charge" of $250 per year went to $1200 per semester per subject last time I was paying. I not spruiking free education rather attempting to demonstrate a well used political process. Getting the idea accepted is harder than expanding the idea.

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