Comments on: Property tax – who are the unintended consequences?

By: B W Baylis

B W Baylis — Mon, 08 Feb 2010 03:38:39 +0000

8th February 2010.

We all know landlords are rip-off merchants, yeah right!! What has not been commented upon are the rorts perpetrated in the corporate sector that we can see but to which the government conveniently turns a blind eye. They are seen by landlords. For this very reason property owners do not trust corporate management and prefer to manage their finances themselves, losses they can see coming and take preventative action. The corporate fat-cats hide the truth to collect their payouts and golden handshakes to depart after the collapse leaving the gambling mess to the shareholders who cannot claim any recompense.
As a retiremtn fund I prefer to manage my own affairs, at least I can do something about trends that I see but ‘managers’ do not.

By: Robert S

Robert S — Fri, 05 Feb 2010 21:55:36 +0000

Can someone please explain why we have the ability now to reduce income by claiming for depreciation. I thought it was to account for the loss in value of a property when it is rented out and thus used. This is a cost,although not a cash item. The alternative to the depreciation system would be to allow the full write off the cost of property upgrades. I would appreciate some thoughts on this, for I am no expert.
Regards to all.

By: J Gale

J Gale — Fri, 05 Feb 2010 03:49:33 +0000

As someone pointed out to me, the sharemarket will be hit hard by the removal of depreciation. Every share in a business benefits from depreciation (and listed businesses depreciate property too) and passes the tax benefits on to the shareholders. The much vaunted depreciation inequity between shares and property does NOT hold; just because shareholders do not understand the balance sheets of the businesses they hold shares in does not mean they are not benefiting from depreciation.

By: Dr Jekyll

Dr Jekyll — Fri, 05 Feb 2010 03:45:22 +0000

I can see more benefit in
1. changing the tax write off from interest paid to a “once off” write off of princpal repaid on investment properties. This discourages extreme leverage cycle and negative gearing.
2.The principal claimable be capped to say a 10-15 year term. Bank’s would be encouraged to lend on the borrower’s “real” capacity to repay the full loan amount rather than just the interest and eliminate the “just servicing interest culture”
3. Require bankers and lenders to have an decreasing gearing % limit ie 80% one rental, 70% for 2 60% for 3 etc.
2. This could also apply if you purchase shares via loan hence provides an investment incentive.
3. Restrict the numbers of LAQC’s a person can have.

I think whatever happens people will push the rules,but as you rightly point out by hitting the rental market too hard it may will stifle the whole economy for many years. Instead it must allowed time to unwind.