If you voted for Labor, do you regret it now? Also, will they introduce CGT on PPOR next?
reddit.comu/PK__Gupta — 12 hours ago
r/AusPropertyMasteryPK
Will investors ever buy old properties if they won't get Negative Gearing benefit, Unless it's a positive cashflow property?
What will happen to old properties coming on to the market? Why will people buy IP if they don't get negative gearing? Not many go for first homes.
Also those grandfathered existing IPs, when people want to sell, no Investor would buy them as they won't get negative gearing? Will sales be low and days on market be very high going forward?
@PK what do you Think.
u/KnowTrident — 2 days ago
**Throwaway for the sheer audacity of the idea**
From what I’ve seen, a normal house + land project can easily be targeting something like 15–25% gross margin (IF developer is buys and builds today). [This is anecdotal from reversing numbers from public building companies (which are large) so take this with a pinch.]
If they land bank first, AND doesnt forward sell, the margins can get even better. this is because they supercharge on the value of the land going up.
That got me thinking about a different model: instead of selling 100% of the house outright, the developer and buyer both go on title. Upside to buyer is lower entry price. Upside to developer is margin locked for the sale in the future.
What developer would offer to buyer:
- Full transparency on landed cost price.
- Purchase the house at cost price
- No rental exposure (for the 20% developer owns)
- Full control on when they sell and who they sell to.
Buyer has to:
- Maintain 100% of the property outgoings (in return for no rent to developer)
- Be 80% owner on the title.
- Give 20% of the sale price back to the developer when selling.
Feels like a decent option for truly win - win. I’m curious if the market would actually want it.
This will only work for new builds or knock down rebuilds. The numbers may make sense AND we will be helping Dr Chalmers with his supply problem.
Theoretical numbers:
Project cost:
1 Hectare site 1 hr from city center could ~ 2 mill.
Planning approval and land clearing 500k.
== (2.5M)
Per house (400k) X 20 (500 sq m houses):
Foundations 100k
Walls: 100k
Roof: 100k
Interior:100k
== 8m
Total == 10.5m
For 20 houses comes to 525k per house.
You the owner gets 80% of the house for 525k. Perpetual right to live, no rental outgoing for the 20% you dont own.
Am I smoking too many winny blues?
u/AdMinimum5036 — 11 days ago
Economists say the tax changes will drop house prices by 4%. I agree, even more in Sydney potentially I believe. Meanwhile other locations to grow over 20% this year. That’s my view. Thoughts?
reddit.comu/PK__Gupta — 1 day ago
Singapore, with a population of just 6.1 million and a land area of 719 square kilometres and with no natural resources, is outperforming a nation of 27.7 million people spread across 7.7 million square kilometres.
Interest rates in Singapore are about 1.0% versus our 4.1%; inflation, 1.2% against 3.7%, and government spending is just 16.8% of GDP compared with our 26.5%. Its top personal tax rate is 24% versus our 47%; company tax, 17% versus 30%, and unemployment, 2% against 4.3%. It runs a current account surplus of 16.7% of GDP, while we run a 2.9% deficit. It even holds more gold – 194 tonnes to our 80 – despite never mining an ounce. Its citizens live longer and emit less carbon per head.
Why?
u/PK__Gupta — 8 days ago
That alone tells you why these proposed May Budget tax changes may not do what people think.
The government is looking at changing capital gains tax, possibly moving away from the current 50% CGT discount and towards an inflation adjusted system for ALL investments.
On paper, this sounds like it helps younger renters.
But in practice, it may do the opposite.
Young people often need to take more risk to get ahead.
They might start with $20K, invest it, and try to grow it into the $60K, $70K or $80K needed for a property deposit.
If those gains get taxed harder, the very people trying to get into the market get punished.
Meanwhile, older investors and retirees often already own lower growth, income producing assets. Under an inflation adjusted CGT system, they may actually be better off.
Here are the numbers that matter:
77% of investors may hold or never sell if CGT is reduced.
New development supply is forecast by CBRE to remain 20% to 50% below historic levels for the rest of the decade.
The government’s 1.2 million new homes target is already expected to miss by around 300,000 homes.
The RBA says Australia’s roughly 2% GDP growth forecast depends heavily on immigration contributing around 1.3% of that growth.
ABS data showed over 3,400 people arriving per day in February.
There are only around 31,000 rental properties available across the whole country.
Australia has around $2.3 trillion in household mortgage debt, but residential property is worth over $12 trillion, meaning debt is only around 19% of total property value.
There is also around $1.7 trillion sitting in household savings accounts.
So every time interest rates rise, yes, some borrowers struggle.
But savers, especially older wealthier households, earn more interest, spend more, and can actually add to inflation pressure.
This is the vicious cycle.
Higher rates hurt younger borrowers.
Higher rates reward older savers.
Higher inflation keeps assets rising.
Higher migration keeps demand strong.
Lower construction keeps supply tight.
And the affordable end of the market gets squeezed even harder.
That’s why under $500K, $600K, $700K and $800K, many markets are already hot.
Agents are not calling buyers back.
Offers are getting rejected.
Listings are tight.
And regional areas are still performing strongly.
So while the headlines say tax changes may help affordability, the actual demand and supply equation says something very different.
The expensive end may soften.
But affordable property may become even more competitive.
Curious to hear your thoughts.
Do you think these tax changes will actually help young buyers, or make the affordable market even harder to enter?
u/PK__Gupta — 7 days ago
This is what happens when you have mass inequality due to multiple govts destroying the middle class.
You get a lower middle class voter base that opts for socialistic policy, knowing that the future is bleak for them.
Australia will become like England in 5-10 years time economically & socially.
We will all dearly miss the Australia of 2000-2019.
The thing is, hard asset / real estate owners, much like the lord’s and land owners of yesteryear, will continue accumulating assets and become the elite class. Just like in feudal times. Because land values aways rise.
u/PK__Gupta — 9 days ago
I heard that negative gearing will be abolished for new investor
As above — what do you think about it? Do you think this is fair for the new generation? Everything else would be grandfathered for existing investors.
u/DryMight2765 — 4 days ago
🚨 PK BUDGET UPDATE: Hey guys I lost my voice over the weekend still haven’t got it back.. so I’m sorry for no video about the budget. I’ll do it when I have my voice back.
But in short: for people buying property for long term passive income through trusts / company there is not much change at all really. For large portfolios, trusts / company structure was the way to go anyway.
Most my clients with larger holdings (or ambitions) were doing it through trusts, where there was no negative gearing anyway. I still generally prefer flexibility of trusts over companies for this strategy, even if trusts get taxed at a minimum of 30% from July 2028. Investment companies have a 30% tax rate too but without the income distribution flexibility.
But if the 30% tax on trust distributions does not get franking credits, then it might make sense to opt for company structure instead - but only in some cases where you have people in your family on a marginal tax rate less than 30%.
Keep in mind property losses can now offset your tax liability on future property gains as negative cashflow properties becomes positive cashflow after few years with rent rises. So that’s actually great across all holding structures for legal tax minimisation.
Going forward cheaper higher yielding properties in the right areas are likely to grow extremely well. No change, these are the ones we have always targeted.
So overall, it’s easy to get upset, but for my strategy (and the one my clients use), with the right structure, the budget isn’t really a huge deal.
Except that rents are going to rise a bit like they did in 2022 - very quickly!
Good for investors, not so much for renters.
Capital Gains Tax will be calculated off the inflation indexation method from July 2027 (from that point onwards only and a minimum of 30% CGT), but once again not a big deal for the long term investor doing it for passive income and early retirement cashflow. They don’t sell much anyway.
CGT changes will hit stock investors more who try to trade the market. I feel for them, it really changes the business case for day trading or short term stock investing in Australia.
Btw if you already have IP’s before the budget announcement you’ve got negative gearing locked in for life (but then again, if you bought in a trust you don’t have it anyway).
Seems like a lot of changes, and yes for a newbie it’s a lot to take in. But for seasoned long term investors or those wanting to become that, it’s a lot of noise for not much actual change.
Property investing is going to be as popular as ever. After all, not everyone can be an entrepreneur and in this fine country there are not many other methods by which the “average Joe” can become financial secure & free. Property investment is a well trodden path.
Hopefully the above brings some simple common sense.
u/PK__Gupta — 1 day ago
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u/PK__Gupta — 3 days ago
Your money is going backwards.
You might feel a higher interest rate on your savings account is a good thing, but you are getting scammed by the bank. Inflation + currency debasement > 10% yearly right now. You aren’t getting that in the bank or offset account.
I know the media noise is making you fearful of investing, but affordable suburbs always perform very well in times of high inflation - real estate is the best hedge for inflation.
This has been true since the 1970’s.
You have to have courage. Just like people did in 2020 / 2021. Their foresight was rewarded.
My clients are buying in record numbers right now. Making the same ~$10k/ month growth in the first year or two as they always did.
The right suburbs will be up $100k by this time next year. So why wait?
u/PK__Gupta — 12 days ago