Select to expand quoteFormulaNova said..
Yeah, muscle cars. Or even collectable cars, but who thinks that even average cars are going to appreciate when you own them. When they are old, they are rubbish and need lots of work. It's only 30 years later that they are worth something if they survive and you have a pandemic at the same time. Old cars are so much work and at least to me, they are still old cars.
You got a few thousand back each year on your tax? I must be the only person that would normally get almost nothing as generally my employers paid me the correct amount and the correct amount of tax on that. A few thousand back is impressive. Was it from work deductions or negative gearing?
The guy I was mentioning before that had 12 investment properties back in about 2004 had one of those agreements with the tax office where due to a obvious reduction in tax at the end of the year, you can get that brought forward and pay less tax upfront instead. It certainly improves your cash flow.
Your example seems decent. $500k after 20 years sounds okay. Did you need to put a lot of work in, or was it set and forget, just paying the loans?
I think all this stuff amplified around the mid 2000s as speculation increased and the capital gains discount kicked in. Negative gearing was certainly a thing before 2000, but no one seemed to snap up property like they do now.
I ha e to say I did t put much work in, they were welfare belt properties.
I might be wrong, I thought everyone got three or four grand back each year on deductions
Select to expand quoteremery said..
I ha e to say I did t put much work in, they were welfare belt properties.
I might be wrong, I thought everyone got three or four grand back each year on deductions
Nope. Unless there are industry specific deductions, and a lot of them to account for 3k, most people should be getting next to no deductions if their PAYG is calculated correctly. The tax tables are pretty clear how much to deduct, so its hard to get it wrong.
But like all things in tax, anything goes, until you get audited. My boring anecdote to this was a work colleague that had the masterplan of renting one level of his house to his business and then deducting the cost of half of his mortgage against his business. I and a few other colleagues pointed out that the income from the business to his personal account should then be taxed.... but unless he got audited, he would have gotten away with it.
Select to expand quoteremery said..
I bought a couple of properties in the "welfare belt" on interest only loans. As a PAYG worker, I don't remember any great benefit from negative gearing. I'm pretty sure my tax return was only a few thousand each year... like many full time employees. I made maybe $500k after 20 years and had to pay of the loans and then pay capital gains tax on half that. I reckon I should have invested in muscle cars.
Edit: I should have added that the only reason the bank gave me a couple of loans was that I out the family home up as collateral.
Not sure how much you paid for them, but I'd assume they went up at least 4x. If I do the maths that's roughly between $15 - 20k per year profit for 20 years. With hindsight everyone can do better, but that risk paid off.
Select to expand quotemyscreenname said..remery said..
I bought a couple of properties in the "welfare belt" on interest only loans. As a PAYG worker, I don't remember any great benefit from negative gearing. I'm pretty sure my tax return was only a few thousand each year... like many full time employees. I made maybe $500k after 20 years and had to pay of the loans and then pay capital gains tax on half that. I reckon I should have invested in muscle cars.
Edit: I should have added that the only reason the bank gave me a couple of loans was that I out the family home up as collateral.
Not sure how much you paid for them, but I'd assume they went up at least 4x. If I do the maths that's roughly between $15 - 20k per year profit for 20 years. With hindsight everyone can do better, but that risk paid off.
I would speculate that he probably got a lot of that tax refund from the investment loans as well. So, altogether not a bad investment if the costs are offset by the tax-deduction against PAYG income. Clearly I am guessing though.
But this is why negative gearing is such a popular thing. Borrow money, get some tax back if its negatively geared. Why would you purposely lose money on an investment? Well, you are speculating that it will go up in price enough to offset the cost of the lost money. If 'everyone' is doing it, there is a much higher chance that prices must go up.
Who loses? Well anyone that just wants to buy a house to live in because prices are jacked up? The government loses income because they subsidise the investor, but they just scrape that back from everyone with other taxes.
But I don't criticize anyone for taking advantage of something the government clearly allows. But I don't think old existing housing should be an investment vehicle. If nothing else it ties up capital in essentially non-productive assets and it could be used for things that might be more productive.
"Australia - where we all speculate on the houses we already live and just buy clever stuff from overseas..."
Select to expand quotemyscreenname said..
Not sure how much you paid for them, but I'd assume they went up at least 4x. If I do the maths that's roughly between $15 - 20k per year profit for 20 years. With hindsight everyone can do better, but that risk paid off.
They were only about $100 grand. We had a lot of dodgy tenants which spoiled the experience. Maybe we should have bought one investment property in a classier area.
Select to expand quoteFormulaNova said..
I would speculate that he probably got a lot of that tax refund from the investment loans as well. So, altogether not a bad investment if the costs are offset by the tax-deduction against PAYG income. Clearly I am guessing though.
But this is why negative gearing is such a popular thing. Borrow money, get some tax back if its negatively geared. Why would you purposely lose money on an investment? Well, you are speculating that it will go up in price enough to offset the cost of the lost money. If 'everyone' is doing it, there is a much higher chance that prices must go up.
Who loses? Well anyone that just wants to buy a house to live in because prices are jacked up? The government loses income because they subsidise the investor, but they just scrape that back from everyone with other taxes.
But I don't criticize anyone for taking advantage of something the government clearly allows. But I don't think old existing housing should be an investment vehicle. If nothing else it ties up capital in essentially non-productive assets and it could be used for things that might be more productive.
"Australia - where we all speculate on the houses we already live and just buy clever stuff from overseas..."
I'm a pretty pathetic investor, I like spending money more than making it.
I don't remember any major tax benefits while I had those properties. Rent barely covered the repayments. Until. Rents went through the roof, but we lost out on that because I had put my down-on-his-luck brother in and left rents the same. Then got taxed on the income I should have made. Because we had no spare money, we didn't spend much on them, I did most of the maintenance, so there were few deductions.
Mates would buy stuff for their own homes and claim it was for the investment properties and get a deduction, but I wasn't up for that.
One time I lived off the profit for a year, delaying paying the capital gains tax while salary sacrificing 100 percent into super. That part worked quite well.
Select to expand quoteFormulaNova said..remery said..
I ha e to say I did t put much work in, they were welfare belt properties.
I might be wrong, I thought everyone got three or four grand back each year on deductions
Nope. Unless there are industry specific deductions, and a lot of them to account for 3k, most people should be getting next to no deductions if their PAYG is calculated correctly. The tax tables are pretty clear how much to deduct, so its hard to get it wrong.
But like all things in tax, anything goes, until you get audited. My boring anecdote to this was a work colleague that had the masterplan of renting one level of his house to his business and then deducting the cost of half of his mortgage against his business. I and a few other colleagues pointed out that the income from the business to his personal account should then be taxed.... but unless he got audited, he would have gotten away with it.
With the data matching that the ATO does, that bright scheme is unlikely to work in the long term. Eventually the property gets sold and capital gains tax applies to the portion that he has let to himself
Select to expand quoteMr Milk said..
With the data matching that the ATO does, that bright scheme is unlikely to work in the long term. Eventually the property gets sold and capital gains tax applies to the portion that he has let to himself
Do the negative gearing tax discounts throughout the ownership get added, when working out capital gains tax?
No. They should. I think there are other countries where instead of writing off the loss on property income against other income it is carried forward and written off against sale proceeds.
There is an interesting twist to how our capital gains tax works. If you make a profit after holding an asset more than a year, you get a 50% discount on the tax, but if you make a loss, it gets carried forward at full value to write off against future capital gains.
Select to expand quoteMr Milk said..
No. They should. I think there are other countries where instead of writing off the loss on property income against other income it is carried forward and written off against sale proceeds.
There is an interesting twist to how our capital gains tax works. If you make a profit after holding an asset more than a year, you get a 50% discount on the tax, but if you make a loss, it gets carried forward at full value to write off against future capital gains.
I've never been interested in negative gearing. Always saw it as too much of a risk. My feeling with property is that the biggest problem is not the speculation on capital gains, or negative gearing, but the basic underlying problem. Which is not enough supply. We are not building enough suitable housing for all the immigrants Australia is importing.
Apartment prices in Melbourne have been flat or have gone down in value over last decade. Apartments are unsuitable for families. We need way more townhouses to be built, land made availale or better transport and infrastructure in regional centers to support the current immigration levels.
Just common sense.
But we continue to just kick the can down the road.
Not surprisingly the video has very little to do with the cost of living. A mention about someone getting ripped off buying grapes out of season, but mostly that CocaCola is expensive. The comments section has a few pearls of 'wisdom', plus the cost of ciggies and gun rights and random crap. I give it one star, purely for the line:
".. in Australia, if you can't go to a tourist attraction and get your children eaten there's no point going..."
Ahhh the irony of complaining about the cost of producing fruit and vegetables for sale while also denying the impact climate change is having on those cost
Select to expand quotePcdefender said..
Check out from 5-30 the cost of grapes and coke at WW.
It's sad that I have devolved to answering questions on the cost of coke... but things are quiet.
If you are stupid enough not to look at the price of things like coke and then change your buying habits accordingly you are the only person at fault. Clearly you can buy more when its cheaper and less when its not. Its cyclic. Just like a lot of other products.
My local had the 2 litre bottles at 10c more than the 1.25L bottles. It's hardly rocket science. At other times they have had the 2 litre bottles at 3 times the price of the 1.25L bottles. You would have to know how to read to figure this out though.
You can also buy alternatives like 'LA Cola'. It doesn't taste as good but it is cheaper and will get you through your coke withdrawal stages.
If my favorite brand of 'whatever' is too expensive, I buy an alternative that's almost as good.
Although in the case of 'grapes are too expensive' I buy coke instead/ in preference, or some other fruit that's in season or cheap.
I wonder, are there really "struggling families" out there that get upset that Pauls icecream is more expensive than last week but still buy it? When we were growing up the only brand names we had were 'No name' brand. Cheap all the time.
25 dollars a kilo grapes - nothing to see here just the inflation rate.
Basic arithmetic has been suspended for aptitude on how to work those funny digital gadgets that i point blank refuse to own.
By the way i drank my first coke in years a few days ago after getting into a bit of trouble in those 35 knot gusts last week and getting hypothermia.
Nothing a 20 minute hot shower, some chocolate, a banana and some coke cannot fix - all compliments of a kind passerby.
Select to expand quoteD3 said..
You're complaining about the cost of grapes, in Perth, in Winter?
Surely they are in-season in Perth in winter? 
Where are my mangoes?
Joking aside, strawberries here are very volatile. You could pay the earth for them one month and another they are almost giving them away.
My blueberry bush is fruiting now, so surely blueberries must be in season and cheap now or soon.
Select to expand quoteD3 said..
You're complaining about the cost of grapes, in Perth, in Winter?
Even in winter they were never anything like 25 dollars a kilo.
But they are now.
I've seen them $30 a kilo or more at times over the past few years, but not during summer or autumn.
Select to expand quotePcdefender said..D3 said..
You're complaining about the cost of grapes, in Perth, in Winter?
Even in winter they were never anything like 25 dollars a kilo.
Thing that surprises me is that clearly people are still buying them. Who is buying $25 a kg grapes?
Stop buying them, and the price will fall. Supply and demand. If no one buys them, the price has to fall... and then they will stop supplying them altogether...
Has PC considered why he can even buy grapes now?
Wasn't that long ago that grapes were really only available during Summer and Autumn unless they were imported/transported long distances.
But somehow table grapes are available well outside of their historical season.
Hmmm... why is that?
Select to expand quoteD3 said..
Has PC considered why he can even buy grapes now?
Wasn't that long ago that grapes were really only available during Summer and Autumn unless they were imported/transported long distances.
But somehow table grapes are available well outside of their historical season.
Hmmm... why is that?
2000 years ago the Romans grew grapes in the north of England.
Doubt they sold them at either Woolies or Spudshed though.
Select to expand quoteCarantoc said..2000 years ago the Romans grew grapes in the north of England.
Doubt they sold them at either Woolies or Spudshed though.
Probs the 'Best Before Date' was introduced to stop Woolies trying to pass off 2000 year old grapes as fresh local produce.
Select to expand quoteCarantoc said..D3 said..
Has PC considered why he can even buy grapes now?
Wasn't that long ago that grapes were really only available during Summer and Autumn unless they were imported/transported long distances.
But somehow table grapes are available well outside of their historical season.
Hmmm... why is that?
2000 years ago the Romans grew grapes in the north of England.
Doubt they sold them at either Woolies or Spudshed though.
Not sure they were growing them in winter either?
Select to expand quotefangman said..
Probs the 'Best Before Date' was introduced to stop Woolies trying to pass off 2000 year old grapes as fresh local produce.
Never thought of that.
Now you mention it, maybe it was why the Roman's loved changing the calendar and introducing new months and deleting entire years.
Although I am not sure there was ever a month called Grapember.
Select to expand quoteD3 said..
Has PC considered why he can even buy grapes now?
Wasn't that long ago that grapes were really only available during Summer and Autumn unless they were imported/transported long distances.
But somehow table grapes are available well outside of their historical season.
Hmmm... why is that?
climate change.....duh
Select to expand quotecammd said..
climate change.....duh
Maybe we could fix climate change by re-naming a month LGBTQIember and moving it to a non-binary season ?
Select to expand quoteremery said..
Wait until you see the grain production estimates for WA this year. (spoiler, less than half of 2023)
afdj.com.au/winter-crop-harvest-of-55-2-million-tonnes-expected-for-2024-25-season/
I was thinking of FN sitting in the Drawing Room having Jeeves prepare and serve his daily avocados on toast, and I wondered how the cost of living is impacting his morning ritual. Here is the cost of avocados for Perth over the past year. Surprisingly Woolies online price is the pick this week.
But more to the point, the price difference over a year: 100% increase. Thank goodness the price of fuel has fallen, the Bentley's were getting expensive to run around the estate.
avocado.org.au/wp-content/uploads/2022/03/Retail-Price-Report-wk-36-2024.pdf
