The C.G.T., if it is curtailed and only applied from July 2017 to newly built dwellings, I can see that prices prior to July 2017 will be on a rocket, going upwards. Everyone will want to get into the market. My hope is that the lenders do not make loans easily available at this time. After June 2017, will the prices for housing hold, rise or fall? Look back to the G.S.T., introduced in July 2000. Prior to that date, everyone wanted everything delivered or invoiced prior to June 30. After that date, things died but slowly resumed to a similar pace to prior the introduction.

People that are in the market at that time that are forced to sell, that miss out on the June 30 deadline may get stuck with property they can not sell, so they drop the price to encourage someone to buy the property. This starts driving property prices down. Imagine a glut of property which no one wants to buy and buyers are dictating the price they are happy to part with their money. The glut of units in inner Melbourne about 10 – 12 years ago springs to mind. Foreign investors buying in units could get a double whammy due to movement in the AU$ against their native currency and the fall in value, bearing in mind the spruikers are often inflating the price well over the true market value.

With property, and I will stand corrected on what I am about to say: You go and borrow to buy a property. Pay $500K, borrow $400K. What happens in the event where there is a major correction in the market in the first say, 5 years, and prices drop by say, 35%? Is there not a clause in the mortgage contract which specifies that you have to have positive equity in your property? If this happens, and the prices fall, what is going to happen? It will start as a trickle of foreclosures, which, the financers, caught with property, will look to sell at fire sale prices. This drives the prices around that home downwards. This could then expose other occupiers and or investors to foreclosure due to negative equity. State and local governments will suffer due to reduced capital costs, but, they will increase the rates to counter that problem! As the rate of foreclosed homes increases, this could do a couple of things. Either hold the rents at current levels, or cause the rents to drop. Rents could increase due to renters being kicked out due to foreclosure and stock removed from the market. What is the standing on a valid rental contract in the case of foreclosure?

There is also the matter of income to property value. At this time, many places are way out of reach for the person working on basic incomes. Even with 2 incomes, it is still minimal chance of getting into a home. While the property prices are high, this favours the lenders, realtors and governments. Should they fall, it may make for affordable home ownership, but, what damage is going to be done to the lenders and governments primarily, and the real estate industry secondly?

Apologies for being so negative, and, I am hoping like hell that this does not play out here, but, from what I have been able to view, minimal respondents to the forums have thought past the basic idea and thought through the end game, so to speak. My request to people is to think things through from many angles and to look at multiple outcomes that may happen. My understanding is that it is called “Due Diligence”.

eg. ROI will increase.

Note I said ROI and NOT “rent”, almost everyone says Rents will increase but its probably a mix of rents will go up BUT also property prices will fall.

Basically this will allow you to purchase MORE investment properties in comparison to the number of hours you need to work FOR that dollar amount.

I also agree with the comment above….its a stupid idea for the govt and it will result in less stamp duty revenue…..but hey it will get them votes and that’s all that matter to politicians.

Keep in mind however that although you wont be able to declare against your current income…..you will still be able to declare against future income.

Eg. my wife and I own investment property in Sydney but live/work overseas (higher earning potential per hour worked).
Currently we choose to run our investments at a slight loss (eg cumulative its always between -2,000 to -10,000pa) anytime we are about to run a profit we leverage and go buy another property kicking it to somewhere back around a 10k loss.

My point being and a lot of people don’t realize this is that as an expat we CANT negatively gear today (basically this makes the whole -ve argument moot for us). What happens is we lodge Australian taxes and this loss carries forward. Our thinking is that in 20 years from now when we retire back in Australia…..it will probably take us 10 years or so before we have to pay any actually tax income as we ‘pay down’ the carried losses.

The same thing will happen with your rental properties, loss on the investment carried forward until rent increases OR you pay down the principle enough to pay down the income covers outgoing.

Consider it ‘delayed savings’, in the mean time the cost to purchase your next investment property went down 10% and your rents went up slightly :)

http://dontplaywithproperty.org.au/?utm_source=search&utm_medium=cpc&utm_campaign=ngfeb

One thing I will say… The deeper we go into a fiscal hole, the more government will find ways to increase revenue. Requiring CGT on personal residences is not out of the realm of probability.

2. Quaranteen or accumulate all losses to be used against future profits or capital gains tax. This way future profits and capital gains tax can be reduced.

3. need to go to bank to borrow for losses. This will increase costs for sale.

4. If purchase more than 3 properties you can seek permission from the tax office not to be treated as a rental investor but as a business. As a business you will then be entitled to claim losses against other business income. Plus depreciation is calculated differently for businesses. Depreciation is calculated not on original cost price of the building BUT on the price you purchased the asset for. You cannot claim it as a deprerciation of a home but as a investment asset.

5. Now you can make arrangements with seller and the bank to buy the asset under a Hire Purchase contract. Under a hire purchase contract say of 5 to 10 years, you are entitled to claim hire or rental charges as a tax deduction. This will mean cost of land and building and everything else is written off over 5 to 10 years.

Please check all the above with accountants and tax agents. This is what I have been told works. If it is so. Please inform me as I will buy 3 or 4 investment assets as a business and get massive writeoffs against business profits.