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Exactly why NG should be removed from established property investments completely.
If you did get rid of it you must rid of CGT at the same time to not discourage investment.
Another option would be to police NG more closely and only make it available for some circumstances. ie only newly built houses under a benchmark build price or maybe approved first home buyers for any house under a benchmark price. That way you can't negative gear a $2m beach house against your $300k salary.
Where else can I get 8% compounding every year for 20 years and pay no tax on my gain. My home was easily the best investment I've ever made. And I got a place to live to whole time as a bonus!!
Not saying it's sustainable, but those are the simple historical facts.
did u see grand designs australia last night? modular build in clovelley. It was a $1.6m Knockdown and they were driving past, saw there was an auction on, one registered while the other had a quick look through and they bought it just like that!
That hydrologist engineer should hang his head in shame. I was thinking water mains. He could have tested the water for chlorine and flouride. Name and shame that turkey
Have to say buying property was financially the smartest decision I've made so far. Perhaps the markets will crash and it will be a dumb decision. However when capital gains far surpass your income its not too bad. I was seriously considering selling up in 2012 and am glad I didn't. Who knows in the future though ? If they do know they are not sharing their knowledge.
Yep, there's a couple of very good investments for your future with minimal tax implications, your residence and your super and this shouldn't change. There is also a link between home ownership and social stability, I'm guessing that this stems from having to have your krap together to be able to cover your financial responsibilities.
I watched that grand designs MUN, that was a bit of a bugger about the water hey?
Well yes of course. One can't just lucky dip invest in the share market, for example.
It's no different in property.
No one ever got rich in property by only owning their own home.
Disagree away...
You can make a little profit buying well and then having a plan of downsizing and moving further from a CBD as your life progresses. But true, unless you get very lucky, you won't get rich buying and selling in the same market.
I'm surprised at the number of people who don't do the maths to constantly calculate and track a "break even" sale price for their investment making sure all costs and taxes are included. For example if you did this and started to see an increasing delta between property sale values and your break even value you have the opportunity to cut your losses and punch out early.
I often wonder when people quote the amount of money they "made" on a a house purchase/sale if they added the real costs of ownership.
1. rates
2. insurance
3. maintenance
4, improvements
5. interest paid on mortgage
6. interest foregone on deposit amount, and the ongoing mortgage payments.
7. depreciation
no 6 is interesting.....if you are paying 5% interest, and you instead invested in the 10 yr ave share market gain of 10%..the cost to you is 15% pa.
I reckon a lot of people don't factor any of the real costs Agent Nods. My wife and I are both "numbers people" , an acquaintance made us aware of what seemed a decent return (about 40% increase on purchase price) on a "fix and flick" real estate investment they made locally. Of course "numbers people" like us are natural skeptics and we also wondered where we had gone wrong to not be getting on board with this high level of return. Anyhow, when you worked out all the expenses and then factored in the cost two people's labour for most nights and weekends for 12 months, we estimated that they made less than $25/hour and then suffered a relationship breakdown. They shoulda just done some overtime. Needless to say, we kept quiet and didn't destroy "the dream"
Agent Nods, your No.6 numbers don't seem quite right. The amount of "principal you have paid off" on the property loan is (hopefully) earning you a capital gain when you eventually dispose of the investment, so the cost difference between the house and the shares is only the difference between the final return percentage values on the disposal of the asset. Not the opportunity value of the principal paid off, plus the cost of the loan. But you're on the right track, very few people ever factor in ALL the costs and invest with their hearts and not their heads.
some of you guys seem to be missing the fact that unless you own more more than one property you are not long property as an investment at all.
ie if your own solitary house goes up in value you arent worth more as the cost of replacing it with a similar quality one has also gone up by the same amount. same goes for the cost of renting a similar property generally speaking (though the latest boom has temporarily put this out of whack in oz)
one of the greatest financial furphys in australia this one.
Okay, I got curious. I've done the figures roughly before, but this time I did it accurately. I bought my home in 1998, and sold it in 2018.
I assumed that every cent I spent on that house was placed into an account that earned 10% p.a. compounding, paying no annual tax at all.
I included: deposit on the house, stamp duty, all my mortgage payments, annual insurance, land rates, water rates, renovations and landscaping, agents fees for the sale, and deducted modest rent for a not so equivalent home.
With the sale of my home, I ended up with a much healthier wad of cash (and I mean beyond any shadow of a doubt) in my hand compared to if I had received the 10% compounding return, and that is before paying any tax on the shares. Then ask yourself how realistic that 10% return is. The median compounded rate of superannuation over the last 25 years is 7.4%. Let's be generous and use 8%, and then I am ridiculously better off before, and even more so after, tax considerations. And to top it off, this is after we really did a fire sale of our house to get a buyer locked in before the Christmas break. Looking closely at the spreadsheet, it is the rent that is the killer for the share investment option.
I'm not saying don't use super, I max mine out every year. But I really don't buy this thing that owning your own home is a poor investment.
