Posts by BenWilson
Last ←Newer Page 1 2 3 4 5 Older→ First
-
Hard News: A Capital Idea?, in reply to Matthew Poole,
under your delusional fantasy
Harsh, dude, it's just an idea. But I agree overall, I can't see it being a good idea to ever put caps on how much profit businesses can make. Indeed, I can't see any likely way to "end the corporate culture of tax avoidance". Tax avoidance is not a crime and businesses would be remiss not to avoid taxes they don't legally have to pay. That's what accountants are for.
The focus should be on changing tax structures so that things that really are profit are taxed as such, just like everyone else has to pay on their income. It's a pretty hard thing to do, because businesses running a total reinvestment strategy can make endless losses, whilst becoming enormous. Which is not bad at all, that's growth by any way of calculating it, and they will eventually have to turn a profit, at which point they should be paying a ton of tax. And there will have been a lot of tax in the meantime too, GST, income taxes on staff, etc.
-
Hard News: A Capital Idea?, in reply to Rich of Observationz,
If you buy a house, you pay a 30-50% premium over rental, so you have to make a gain not to lose.
That depends on how much you borrow, of course. If you buy it outright, you're not paying any mortgage. There's a break even point where rentals and mortgages are the same. I remember working it out to be around 30% in Oz in the 90s, I don't know what it is here, now. It is quite dependent on interest rates, so can change a heck of a lot.
-
Hard News: A Capital Idea?, in reply to Danielle,
The more I read these threads, the more I realise my profound financial naivete. That would never have occurred to me.
Well, it is a little hard to believe when you hear capitalist rhetoric about the virtues of investment, which are all very plausible when it comes to setting up a small business of practically any other flavor than property investment. The only other ones that seem to be nearly as bad tend to be all about other financial instruments. What all these guys don't get is that money flowing around and around doesn't make squat. Only production makes something. So actually building or improving homes is practically the only good capitalism involved in the property market.
-
Hard News: A Capital Idea?, in reply to JLM,
In the end they didn't, by the simple expedient of saying that they had intended to build on the section but had changed their minds. Both sections were sold at a "handsome" profit.
This was the fiddle that DexterX never seemed to accept was commonplace in the first thread which touched on CGT. Perhaps he's just too honest in his own business to see it?
-
Hard News: A Capital Idea?, in reply to Matthew Poole,
Thinking so far has been to make an annual net loss and use the capital gain to make up for it.
Yup, that's one of the most crazily dysfunctional parts of the system is that it actually encourages people to lose money. And it's not like that is hard. This is especially compelling to people who are bitter on tax generally. To my mind, a generalized encouragement of tax avoidance is nutso, the focus should be on making productive business. Then you'll make stacks and not grudge the tax.
Better would be stricter controls about the amount of leverage allowed. Yes, that will cut more people out of the market for a while, but it will also reign in rampant inflation, which is the main thing cutting people out in the first place. This really should be a no-brainer since the sub-prime crisis that precipitated the GFC. I don't have an actual reasoning for the ideal figure yet, though, any thoughts welcome. 20% was what I had to get for my place, being self-employed. But I'm almost thinking it should be higher for investment property, something around 30%, basically set at a point where they break even on rents and interest costs, so there is no loss. Then it is a real business, rather than a tax fiddle.
-
Hard News: A Capital Idea?, in reply to Danielle,
But you only have to pay the tax if you *sell the house*. Right? So if you're keeping the house, why should it affect rent except in some sort of nebulous future sense?
People are weird.
Not really, I think DexterX is right to fear the CGT, it certainly will bite property investors, since it will reduce speculation. Without the speculators, rapid property value rises are less likely, which could be something that would hit DexterX in the back pocket, if he's banking on that.
But it's quite possible for investors to simply change strategies, away from the buy/develop/flick mentality to buy/develop/hold. Which doesn't seem any less profitable in all the countries with CGT, since there is no change in the fundamentals driving the value of property. In fact, reduced volatility in those markets would seem to me to be one of the biggest things that drove Australia shrugging off the GFC. I know several people who are property investors in Oz, and they have all made mad cheddar right through.
Also, DexterX raises other issues which should not be ignored, that there are other things to fix too. But, I don't think the existence of other alternatives is a good reason to oppose CGT. It should be opposed on its own merits and failings.
Personally, I think the one thing that would really turn our economy Australia-ward would be to introduce compulsory super savings. I opposed the idea for many years, especially the time I was in Australia, because of the kind of objections DexterX raises regarding CGT, that I rated my own management of money as better. But the shameful truth is that the biggest stack of cash I personally have is still my Ozzie super fund, despite having only worked there for 5 years, and having been in NZ for 11 years on a similar income, I've fallen into the property trap too, worrying about the value of property, overleveraging, etc.
Also, on another ironic note, my own children have more cash than I do, because we set up Kiwisaver accounts for them, and have regularly contributed to them, and made a firm rule to never ever draw money from them, easily enforced because that would actually be stealing. But it doesn't seem like stealing when it's my own savings I'm working with, which is why I have bugger all of them. But in a sense, it is stealing, stealing from my own future.
If Labour platformed on that as well, I'd be sold. It would be a gutsy step, a hard sell, but IMHO it would make an enormous difference to our economy, very rapidly. It would stimulate the local stockmarket hugely, to have millions of quite large funds investing some proportion into them.
Yes, I know that high rates of saving caused economic stalling in both Japan and Germany. But if NZ had an economy that performed half as well as either of them during the period when they were poor and hungry countries, I'd be stoked. They stalled because they got rich and lost their hunger - is that so bad, really?
-
Hard News: A Capital Idea?, in reply to Islander,
It’s a good basic home, in an especial area – but, because of very wealthy people lately building here, is now waaay over-valued (and that is not to my advantage.)
You've considered trading down? It's a common choice for people who have an overvalued house. Sell it, buy something more appropriate, use the residual cash to be more comfortable in your retirement, or, and I hope this is the case for you, comfortable enough that you can finish that next book without worrying about catching enough fish to live on.
I'm not advising this, you should make up your own mind. Some elderly people I know have done that, moving from trendy old Herne Bay out to Pt Chev, selling off a house that was highly appropriate when they had 5 kids living there, not so much when it was just 2 of them. They selected a nice warm, sunny apartment, an easy walk to Pt Chev beach.
But I won't say they haven't had misgivings. They're further from the old life they forged, old friends, facilities that they liked, further from the city, substantially so by bus. I'm pretty sure there was a massive cull of stuff too, they were also bookworms, and they no longer live in their library.
It's an option, is all.
-
Hard News: A Capital Idea?, in reply to giovanni tiso,
On this logic, why have taxes at all?
I think that actually was the question. And it's just too big for this thread, really a non-sequitur. Nick, given that we have taxes on income/profit in NZ, what reason is there for a strange loophole in this for property investors?
-
Hard News: A Capital Idea?, in reply to James Butler,
Except a significant portion of that is in Australia anyway, so I'm assuming Aus. CGT will be payable.
Only if you sell. Hold it, take the rents. It's a good system - it's not like there aren't heaps of people in Oz who have made a mega fortune in property.
If Farrar and Coddington don't like it, we should probably order two.
The upsize would be to make it impossible to claim interest as an expense. That actually would precipitate a market collapse, IMHO. But it could be phased in gradually, reducing the proportion that can be claimed every year. Then we'd just have a neverending recession, probably followed by an amazing period of growth. It's neva gonna happen.
-
Hard News: #NetHui: it's all about you, in reply to Steve Barnes,
If you were on the average wage, here in NZ and not taking inflation into account, you would have to work your entire working life of 50 yrs to net that amount after minimal expenses like food and little else.
You're also not taking compounding interest into account. People who save up do usually end up with a big stack from quite modest but constant investment. But most people don't save up. It's really quite hard.
Edit. The fact that it's hard is part of the reason I think compulsory super is a good idea. Then it's not hard, just an accepted, institutionalized idea that almost everyone will retire with a big sack of case. It's really quite a good thing.
Last ←Newer Page 1 … 572 573 574 575 576 … 1066 Older→ First