flag of convenience Posted May 23, 2015 Share Posted May 23, 2015 My situation is that I would like to buy an investment property in Oz for my daughter to live in (She doesn't want to buy just yet) and where we could come back to from time to time (I can get short term contracts with my company). But I am not up for making a loss - particularly if I have little to offset it against if based in UK for most of the year. I don't want anything grand (a small townhouse would do) but most of the smaller property seems to be built for the investment market and not for people to live in.... Small rooms, shoddy finishing. crowded in, potential rental returns on particulars. It's partly my fault for wanting to stay in such a desirable area but I do love it here. I do wish that negative gearing would be abolished and people could start building homes. I did talk to a real estate agent today and she said there was already an oversupply of units to rent in Sherwood - so prices for rents are being negotiated down - Three huge blocks of units are currently being constructed near to me - Who's going to rent them? a real feeling that the boom has passed - unless renters can be spirited out of the ether..... The government has been forced to act on banks and speculative with the housing market grossly unbalanced with the vast majority of housing going to speculators. This may help subdue the price. Although another ill thought rate cut will do little to stifle prices. All very sad I completely agree. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted May 23, 2015 Share Posted May 23, 2015 Up to a point I agree but there is a big difference between those in a position to reinvest earnings and enjoy compound and those who need to generate an income on which to live from their savings in their retirement. With savers struggling to achieve rates of 2% gross pa in recent years you probably could not live off £1,000,000 without burning significant amounts of capital (and few of us have a £million). The best answer is diversification, not all eggs in one basket. I agree but thought diversification would be a for gone conclusion. Quote Link to comment Share on other sites More sharing options...
FTA Posted May 26, 2015 Share Posted May 26, 2015 It has become an 'entitlement ' and anyway we suffer such poor governance little can be expected to change until the lot blows up. The average Australian will need to sacrifice their life on the thread mill of mortgage payments. Not forgetting even when houses decline in price they'll be after the original mortgage and how. No handing in the keys here like in UK when it all belly flops. Some would argue that without the investors, less houses would be built, which would lead to a real shortage of housing, which would also drive prices up but leave people on the street. I can see the advantages of negative gearing. I also agree that if you have the cash in hand, there are much better ways to invest it. But if you are mortgaged to the hilt like most, there is no better way than to select top gear in reverse. The banks are not going to give you several hundred thousand to gamble on the stock market, even if it is a better investment. Once you have some equity and you are done with negative gearing, you can then think about drawing down on the mortgage/s to invest in something else. Developers need a lot of investment before they build anything, and owner-occupiers just aren't enough. The government could help with a decent first homeowners grant but I reckon this would just fuel the market even more and we'd never catch up. If I were PM, I'd be building good quality developments, not the **** that housing commission build, enough for all first home owners and a bit more just in case, at cost price, or discounted (home owners grant). But your right, it will never happen because the government is only interested in selling off every asset they have, rather than managing it themselves and having some sort of control over the economy. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted May 26, 2015 Share Posted May 26, 2015 Some would argue that without the investors, less houses would be built, which would lead to a real shortage of housing, which would also drive prices up but leave people on the street.I can see the advantages of negative gearing. I also agree that if you have the cash in hand, there are much better ways to invest it. But if you are mortgaged to the hilt like most, there is no better way than to select top gear in reverse. The banks are not going to give you several hundred thousand to gamble on the stock market, even if it is a better investment. Once you have some equity and you are done with negative gearing, you can then think about drawing down on the mortgage/s to invest in something else. Developers need a lot of investment before they build anything, and owner-occupiers just aren't enough. The government could help with a decent first homeowners grant but I reckon this would just fuel the market even more and we'd never catch up. If I were PM, I'd be building good quality developments, not the **** that housing commission build, enough for all first home owners and a bit more just in case, at cost price, or discounted (home owners grant). But your right, it will never happen because the government is only interested in selling off every asset they have, rather than managing it themselves and having some sort of control over the economy. An argument long passed its use by date I'm afraid. The present situation is turning the population into a nation of renters. Many never able to afford or have better sense than to mortgage themselves to the hilt as being the case under the present Ponzi system. Just a quick look at the figures shows the system is not working to say the least. With only 16% of the main city market now purchased Not as speculative investment, with yields so low and rents too high, a bubble has clearly developed. Negative gearing furthers the outrage but no government appears to want to tackle the insanity at the moment. We all understand the advantages to the punters out there but to the nation as a whole? Obviously it is or has been in the money lenders interests to get as many leveraged as possible as easy profit for the banks until/unless the thing goes belly up and guess who bails out the banks? Developers have been calling a few too many shots in recent times. Just to what degree what is being built is what is actually required by Australians because a lot of it wouldn't be touched with a barge poll from my observations. It is often largely aimed at the overseas Chinese market to house students, back packers and short termers or in fact remaining empty and bought as investment or infrequent visits to Australia. No more First Home Buyers Grants please. Falls into the hands of developers who adjust prices accordingly. We really do need to find a solution to the rot that has been allowed even encouraged to happen in all our cities with Sydney already and Melbourne fast becoming let alone Perth (though declines expected) which have made a once considered 'normal' Australian life has become rapidly a thing of pipe dreams. Government being behind the Ponzi scheme together with financial and media lobbies little will change until forced to kicking and screaming. At what price by then? Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted May 26, 2015 Share Posted May 26, 2015 I think its all a pyramid scheme personally. Yes vary much. A House of Cards being another. A light wind likely to bring it all down. Quote Link to comment Share on other sites More sharing options...
Paul1Perth Posted May 26, 2015 Share Posted May 26, 2015 It has become an 'entitlement ' and anyway we suffer such poor governance little can be expected to change until the lot blows up. The average Australian will need to sacrifice their life on the thread mill of mortgage payments. Not forgetting even when houses decline in price they'll be after the original mortgage and how. No handing in the keys here like in UK when it all belly flops. Are you getting mixed up between the US and UK flag? Didn't know you could just hand in the keys and walk away in the UK. I'm sure the banks would be chasing you for your debt. Quote Link to comment Share on other sites More sharing options...
Paul1Perth Posted May 26, 2015 Share Posted May 26, 2015 The trick with negative gearing is to only make a loss on paper and not an actual cash loss. This is done through things like depreciation, although I still think you are far better to make a profit even with all your costs taken in to account. I have a couple of friends with investment properties and they have made it work for them in many ways. They have bought in places where it's nice for them to go for a summer break when the place hasn't been rented. They have bought in holiday places where they've managed to get higher, short term rents and they've spent money improving their own house and writing the cost off against their investment property. Not strictly legal but I bet everyone knows the loopholes, including the accountant. We thought we could do our own tax return and the first year we were here we spent a few nights going through the forms and submitting it ourselves. The second year we were here I was working away and the wife didn't have time to go through the forms and said she was going to see and accountant. I tried to put her off as I didn't think it was a necessary cost. As it turned out it's been one of the best things we could have done. We had got through most of the forms that year and come to the conclusion that we would be owing the taxman. When she went to the accountant he looked through what we had done and came to the same conclusion. The accountant said "can't have that can we and asked a lot of questions about what me and the wife did for work and claimed for things that we had never considered. All legit. By the time he'd done we got a couple of thousand back. We go to see him every year since. Same guy, all submitted on line and paid in a week or so. Takes about half an hour to do me and the wife's returns and we always get some back. He more than pays for himself every year.:cool: We don't have any investment properties though, always steered clear and any spare cash we've had has gone off the mortgage. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted May 26, 2015 Share Posted May 26, 2015 Are you getting mixed up between the US and UK flag? Didn't know you could just hand in the keys and walk away in the UK. I'm sure the banks would be chasing you for your debt. What I found largely during the late 80's decline in UK house prices was that the mortgagees had little money or assets in many cases to go after. Easy financing had seen many leveraging themselves into impossible positions if/when as the case turned out prices went southwards. People did indeed drop off keys into building societies and as noted there was little to go after without impoverishing people to an unacceptable degree. (many on very low wages) Many or nearly all I suppose in such a situation having negative equity. Come an improvement in circumstances the lender would of course go after the owed money. Often on the purchase of another house years later sometimes to the surprise of the person wanting to purchase or indeed could enforce the sale to recoup earlier loss if the buyer had somehow gone ahead and purchased perhaps joint partners name or something. Probably varied depending on who possessed the loan. You are right no free lunches but can't help but think the lenders would be far harsher in todays world and being turfed out onto the street wouldn't be an issue for them if push came to shove. Quote Link to comment Share on other sites More sharing options...
legoman Posted May 26, 2015 Share Posted May 26, 2015 Nice thread, one i shall keep an eye on, I sold my uk house here and happy with price, wil rent there for starters keeping an eye on prices etc, The exchange rate is very healthy my way at the moment but I have to wonder why and suspect more of adownturn there rather than strength of pound. tuck my money away and await house price movements, as an amateur I can only go on a hunch rather than experience. Quote Link to comment Share on other sites More sharing options...
FTA Posted May 27, 2015 Share Posted May 27, 2015 Developers have been calling a few too many shots in recent times. Just to what degree what is being built is what is actually required by Australians because a lot of it wouldn't be touched with a barge poll from my observations. It is often largely aimed at the overseas Chinese market to house students, back packers and short termers or in fact remaining empty and bought as investment or infrequent visits to Australia. You can blame Rudd for this, before he came along developers were forced to sell a certain percentage on the local market, which forced then to maintain a degree of quality. Now 100% of what they build can be flogged overseas. Quote Link to comment Share on other sites More sharing options...
akiralx Posted May 27, 2015 Share Posted May 27, 2015 There was an interesting article in the Melbourne Age last week - pointing out that there 2 million small businesses in Aus. Really - so 1 in 11 of the population is 'running' one? More like 1 in 7 if you exclude the young and very old. Many of these are just bogus tax rorts - the comments under the article confirmed this, some saying in certain areas everyone is at it: electrical goods, renovations, landscaping, faster broadband etc all written off against some loss-making 'business'. One said his neighbour claimed for a guard dog (the family pet - probably a chihuahua...) I was amazed to see a huge banner outside a Melbourne CBD branch of JB Hifi pointing out the imminent $20,000 small business write-off - pretty much encouraging spending on laptops, TVs and other nice electrical items for your 'business'... apparently the Government are slightly concerned about tax rorting relating to this - no sh*t, Sherlock! Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted May 27, 2015 Share Posted May 27, 2015 You can blame Rudd for this, before he came along developers were forced to sell a certain percentage on the local market, which forced then to maintain a degree of quality. Now 100% of what they build can be flogged overseas. Yes a misguided to say the least policy. The reality being I blame all successive governments equally if not more when the end result was clearly in display. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted May 27, 2015 Share Posted May 27, 2015 There was an interesting article in the Melbourne Age last week - pointing out that there 2 million small businesses in Aus. Really - so 1 in 11 of the population is 'running' one? More like 1 in 7 if you exclude the young and very old. Many of these are just bogus tax rorts - the comments under the article confirmed this, some saying in certain areas everyone is at it: electrical goods, renovations, landscaping, faster broadband etc all written off against some loss-making 'business'. One said his neighbour claimed for a guard dog (the family pet - probably a chihuahua...) I was amazed to see a huge banner outside a Melbourne CBD branch of JB Hifi pointing out the imminent $20,000 small business write-off - pretty much encouraging spending on laptops, TVs and other nice electrical items for your 'business'... apparently the Government are slightly concerned about tax rorting relating to this - no sh*t, Sherlock! Same for Harvey Normans here in Perth. Noticed it a day or two after it was announced. A good point with regards to small business. Australia remains open alright. Open for rorts galore on every front. Quote Link to comment Share on other sites More sharing options...
Paul1Perth Posted May 27, 2015 Share Posted May 27, 2015 Just a way of stimulating the economy. Give people a feel good feeling for a couple of weeks. Quote Link to comment Share on other sites More sharing options...
FTA Posted June 6, 2015 Share Posted June 6, 2015 There was an interesting article in the Melbourne Age last week - pointing out that there 2 million small businesses in Aus. Really - so 1 in 11 of the population is 'running' one? More like 1 in 7 if you exclude the young and very old. Many of these are just bogus tax rorts - the comments under the article confirmed this, some saying in certain areas everyone is at it: electrical goods, renovations, landscaping, faster broadband etc all written off against some loss-making 'business'. One said his neighbour claimed for a guard dog (the family pet - probably a chihuahua...) I was amazed to see a huge banner outside a Melbourne CBD branch of JB Hifi pointing out the imminent $20,000 small business write-off - pretty much encouraging spending on laptops, TVs and other nice electrical items for your 'business'... apparently the Government are slightly concerned about tax rorting relating to this - no sh*t, Sherlock! It will at least help the legitimate small businesses, which have the odds squarely against them from all quarters. But its only a band-aid solution. Everyone could be running one, but it won't save the ecconomy. Quote Link to comment Share on other sites More sharing options...
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