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SMSF property ban - an extra Budget sting for investors · The Money Puzzle

0:10
Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
0:13
Speaker 1: James Kirkby. Welcome aboard everybody. I'll have to say we
0:16
Speaker 1: really are as property investors in a state of flux
0:19
Speaker 1: just now when it comes to this historic sweeping changes
0:26
Speaker 1: announced in the budget to CGT, to negative gearing, to
0:30
Speaker 1: family trust and if you haven't, if you aren't up
0:32
Speaker 1: to speed, it now looks very likely that borrowing inside
0:38
Speaker 1: self managed super funds will be banned by the government
0:43
Speaker 1: as part of a trade off if you like, with
0:47
Speaker 1: the Greens Party to get the broader budget legislation through parliament.
0:53
Speaker 1: There is a lot for property investors, all investors, but
0:57
Speaker 1: property investors in particular, to get across. The one thing
1:01
Speaker 1: you may already know is that clearance rates Nation might
1:05
Speaker 1: have gone under fifty percent for the first time since COVID.
1:08
Speaker 1: That's not a signal. I don't know what it is.
1:11
Speaker 1: I want to talk to a active property investor about
1:15
Speaker 1: how they are dealing with this and I think you'll
1:17
Speaker 1: find it very interesting. What we have got on the
1:20
Speaker 1: table for you this morning is bo He's from the
1:23
Speaker 1: Maple Investment Group, who is an advisor and large property
1:27
Speaker 1: owner of forty properties or so to his name, and
1:30
Speaker 1: he is starting to review his situation here. How are
1:34
Speaker 1: you bo very well?
1:35
Speaker 2: Thank you, James, appreciate you having me.
1:37
Speaker 1: I appreciate you coming on the show. I mean, I
1:40
Speaker 1: know most serious professional investors like yourself will say pretty quickly, oh,
1:45
Speaker 1: tax shouldn't matter, and you should never invest on the
1:48
Speaker 1: basis of tax, et cetera. But we have had substantial
1:52
Speaker 1: changes now. CGT greatly sort of rolled back, not half
1:57
Speaker 1: as attractive as it was the CGT tax situation and
2:00
Speaker 1: property negative gearing for existing properties eliminated very soon. And
2:05
Speaker 1: on top of that, you can't will it looks like
2:07
Speaker 1: you will longer be able to borrow in your super
2:10
Speaker 1: fund to do property investment, just as it was recovering,
2:14
Speaker 1: just as it was reviving justice BANKSAKA and people coming
2:17
Speaker 1: back into the market. Putting all that together, what is
2:21
Speaker 1: your view now on investing in property and the degree
2:24
Speaker 1: to which tax matters.
2:26
Speaker 2: It's an extremely interesting time. Obviously, these tax changes were
2:31
Speaker 2: completely a surprise to a lot of people. It was
2:35
Speaker 2: something that twelve months ago nobody thought was going to happen.
2:38
Speaker 2: I would say, first of all, the top end of
2:40
Speaker 2: town and people that have been investing in some time,
2:43
Speaker 2: like myself, I bought my first investment property at nineteen
2:46
Speaker 2: years old. I'm thirty one at the moment, and financially
2:50
Speaker 2: we're largely unaffected, to be honest, because we've obviously had
2:55
Speaker 2: the negative gearing Grandfather, which hasn't really changed our cash
2:58
Speaker 2: flow week in week out, and I would argue that
3:01
Speaker 2: it's improved our situation in the sense because you know,
3:04
Speaker 2: the prediction from the government was that rents were only
3:07
Speaker 2: going to go up two dollars a week. We can
3:09
Speaker 2: see from the modeling, particularly in Queensland, that in some
3:12
Speaker 2: areas it's been nine times the original projections. So it's yeah,
3:18
Speaker 2: it's certainly you could say financially it looks like a
3:21
Speaker 2: good thing.
3:22
Speaker 1: I think it's a good thing, and that you find
3:24
Speaker 1: yourself inside the privileged group which you are able to
3:26
Speaker 1: keep thanks xeering. But moving forward, looking ahead, what does
3:31
Speaker 1: it mean for you and how do you see this
3:33
Speaker 1: SMSF lending in on top of everything else.
3:37
Speaker 2: The SMSF lending is a really interesting one. You know,
3:40
Speaker 2: it's again there's the attack on property investors. We know
3:44
Speaker 2: from the statistics that owner occupiers will house less people
3:50
Speaker 2: than renters. So renters there will always be more people
3:53
Speaker 2: occupying that property. And with the cost of livings that
3:56
Speaker 2: we find that there's a rise in co living. Duplex
3:59
Speaker 2: investment are quite popular, and granny flats, which I've started
4:02
Speaker 2: building on a few of my investments, have also been
4:05
Speaker 2: quite popular. So things promoting the supply and multiple people
4:09
Speaker 2: in the properties, we find it's more effective to get
4:13
Speaker 2: people housed. However, every time an owner occupier actually purchases
4:18
Speaker 2: that property, there's typically less people living in that house,
4:21
Speaker 2: so that those renters will need to move to a
4:23
Speaker 2: new area, whether that's further out, whether that's something a
4:26
Speaker 2: bit more population than's like an apartment or something.
4:29
Speaker 1: Mm hmm. So do you think it will cool the market?
4:33
Speaker 1: I mean, this is this clear and street at fifty
4:35
Speaker 1: percent is what does that tell us?
4:37
Speaker 2: It tells us that that we've got a government that
4:41
Speaker 2: is not supportive of investors. And whether you think that's
4:43
Speaker 2: a good thing or a bad thing, investors are going
4:45
Speaker 2: to they're going to pull the levers that they can pull,
4:48
Speaker 2: you know, whether that's trying to increase rents, whether that
4:52
Speaker 2: has supply issues on the market, because all of a sudden,
4:54
Speaker 2: if investors get out you'll have owner occupiers taking the place.
4:58
Speaker 2: If owner occupiers take the place, there is still going
5:01
Speaker 2: to be people that are left out of the equation.
5:03
Speaker 2: And typically owner occupiers, they'll buy on emotion, they'll generally
5:06
Speaker 2: pay a little bit more. So Yeah, I mean, it's
5:10
Speaker 2: one of those things that if you don't get in,
5:12
Speaker 2: I would say in the next few years, it's going
5:14
Speaker 2: to be it's going to be pretty grim and you'll
5:16
Speaker 2: have a tough time. It's just my personal opinion. And
5:19
Speaker 2: then financially, obviously US investors that have been here for
5:23
Speaker 2: a while, it largely doesn't affect us. I've already got
5:25
Speaker 2: a property inside myself managed super fund and alone and
5:28
Speaker 2: everything like that. Obviously you can't loan anymore inside the smsfs.
5:33
Speaker 2: What's that going to do. I don't think it's going
5:34
Speaker 2: to help the supply issue.
5:36
Speaker 1: Does it create again like the negative gear and grandfathering,
5:38
Speaker 1: Does it again create a sort of two tier market
5:41
Speaker 1: where there's some people who were lucky enough to be
5:43
Speaker 1: in there before the gate came down?
5:45
Speaker 2: Yeah, I mean absolutely. And if you didn't, if you
5:48
Speaker 2: didn't take advantage of this, and you're sitting there and
5:51
Speaker 2: you know you're sitting there with three two three four
5:52
Speaker 2: hundred thousand in your super you know, maybe you're waiting
5:55
Speaker 2: for it to build up a little bit more before
5:56
Speaker 2: buying into a property. You're no longer going to be
5:59
Speaker 2: able to do that. So a lot of the properties
6:02
Speaker 2: we know inside self managed super funds are one part contracts,
6:04
Speaker 2: which means that they're new properties, but their properties that
6:07
Speaker 2: are not yet built, so the SMSF doesn't have to
6:10
Speaker 2: have the construction risk. So we're obviously going to see
6:13
Speaker 2: that completely go away. And then we know that new
6:16
Speaker 2: housing in the market is a thing that the government
6:18
Speaker 2: wanted to wanted to encourage. So I mean if there
6:21
Speaker 2: were some carve outs that perhaps you could only lend
6:24
Speaker 2: to new properties one part contracts, I mean perhaps that
6:29
Speaker 2: could have been argued as helping the supply a little
6:32
Speaker 2: bit and helping the other side that they want to assist.
6:34
Speaker 2: But we haven't seen any of that. It looks like
6:36
Speaker 2: it's just a blanket rule there.
6:38
Speaker 1: It does so far, and folks, as I say, this
6:40
Speaker 1: is just literally broken as we speak. Our Canberra reporters
6:45
Speaker 1: on the Australian have confirmed that they have seen documents
6:48
Speaker 1: to say that this will be in legalship of basically
6:51
Speaker 1: that the government will ban the SMSF borrowing a Greens
6:55
Speaker 1: demand in exchange for putting the getting the Greens to
7:00
Speaker 1: put through the legislation in the Upper House. So, Bill,
7:05
Speaker 1: you have been in the domestic market always largely, so
7:09
Speaker 1: I believe your view is really changing with this budget
7:12
Speaker 1: and the atmosphere in the market, and you're looking how
7:15
Speaker 1: you never looked before. Tell us a little bit about
7:17
Speaker 1: what you're doing.
7:19
Speaker 2: Yeah, well, over the last six months and I've really
7:24
Speaker 2: started to push forward and accelerate the process that I
7:27
Speaker 2: was that I had begun. I purchased a let's say,
7:30
Speaker 2: a holiday house in New Zealand that may turn into
7:34
Speaker 2: a PPR or a rental, will keep it flexible, but
7:37
Speaker 2: I like having the option at this point because it's
7:40
Speaker 2: very clear since a few years ago that you could
7:42
Speaker 2: see the writing on the wall that the administration was
7:45
Speaker 2: not supporting investors and they weren't supporting people that were
7:50
Speaker 2: you know, that they were making things tougher. So for me,
7:52
Speaker 2: you know, I paid land tax. I remember I would
7:54
Speaker 2: have been twenty six, twenty seven years old, reason being
7:57
Speaker 2: I had a few apartments, I had regional properties in
7:59
Speaker 2: my early twenties, qualify for the and I was also
8:02
Speaker 2: able to buy into States, so I was able to
8:04
Speaker 2: avoid the land tax threshold, whereas in Victoria they reduced
8:08
Speaker 2: it a few years ago twenty twenty four, from three
8:10
Speaker 2: hundred thousand to fifty thousand. And this was the first
8:13
Speaker 2: wake up call where I was like, oh wow, And
8:15
Speaker 2: they throw certain other things in place, they make things
8:19
Speaker 2: tougher for businesses, and you just see the writing on
8:21
Speaker 2: the wall a little bit. So for me, luckily, I
8:23
Speaker 2: started pivoting some time ago, but since the budget, I've
8:26
Speaker 2: absolutely accelerated that and now going heavy into UAE, particularly
8:30
Speaker 2: as the price drops a little bit, and more so
8:33
Speaker 2: open to other markets that are open to us, you know,
8:36
Speaker 2: and not only looking at the white lens.
8:39
Speaker 1: Is it actually worth the effort that it would take
8:41
Speaker 1: to do that compared to obviously the climate has changed
8:45
Speaker 1: and it is against property investors. The budget has put
8:49
Speaker 1: in a string of changes that are all making property
8:53
Speaker 1: investment less attractive. But is it worth the effort?
8:57
Speaker 2: It's such a great question, James. And for a long time,
9:00
Speaker 2: and I think a lot of us, do we ignore
9:02
Speaker 2: what happens right in front of us, and things potentially
9:04
Speaker 2: get worse and you see the saying where you're a
9:07
Speaker 2: frog in warm water and eventually it starts to simmer
9:10
Speaker 2: and boil. And I think that's exactly what's happening here.
9:12
Speaker 2: Is it worth it well to put it into perspective?
9:15
Speaker 2: I mean I bought a place in Bulleen, quite a
9:17
Speaker 2: good suburb near Ivanhoe. You know, if you were to
9:19
Speaker 2: buy a house there ten years ago, you pay around
9:21
Speaker 2: I worked it out the other day. It was close
9:23
Speaker 2: to about one point one million. Today ten years later
9:26
Speaker 2: it's worth around one point two you know. So if
9:29
Speaker 2: you actually look at a majority of properties in the market,
9:31
Speaker 2: they're barely keeping up with inflation. And when you factor
9:35
Speaker 2: in that, you know a lot of these properties are
9:36
Speaker 2: now negatively geared. Now for a lot of these properties,
9:39
Speaker 2: you can't qualify for negative gearing, so your only options
9:42
Speaker 2: are either to sell or to increase your rents if
9:45
Speaker 2: you can. We're in a market where it's much better
9:47
Speaker 2: to actually rent. And now you know, they're proposing introductions
9:51
Speaker 2: where renters can break fixed term tenancy agreements and off
9:54
Speaker 2: a four weeks notice all these sorts of things. So
9:57
Speaker 2: property investors are just getting hit over the head and
9:59
Speaker 2: Australia is more of a I'm going to say more
10:02
Speaker 2: of a socialist economy now it's moving towards that that
10:04
Speaker 2: I want people to have large portfolios. And you can
10:07
Speaker 2: sit here and complain and fight and say this and that.
10:10
Speaker 2: But for me, what I like to do is I
10:12
Speaker 2: like to just play the best card on the table.
10:15
Speaker 2: And to give an example, there's investments overseas that are safe,
10:19
Speaker 2: that are freehold, that many investors from around the world
10:23
Speaker 2: are buying, and that are giving you ten percent rental returns,
10:26
Speaker 2: and they're ten percent rental returns, they're freehold. They're there,
10:31
Speaker 2: you can send the money back to Australia and like
10:35
Speaker 2: your situation is going to be far better. So I
10:37
Speaker 2: would argue that it's just education, the only thing that
10:40
Speaker 2: lacks and the more education you get, the less risky
10:43
Speaker 2: and investment's going to be. And I'm sure when we
10:45
Speaker 2: all bought our first whether it's our own home or
10:48
Speaker 2: our own investment property in Australia. For me, when I
10:50
Speaker 2: bought my first one at nineteen, I wrote about fifteen
10:53
Speaker 2: clauses in building and past subject to all these different
10:56
Speaker 2: things like trust me. It was ridiculous. They laughed at me,
10:59
Speaker 2: but I was nervous and I was scared when I
11:01
Speaker 2: wore my first problem in Australia come a long way.
11:04
Speaker 1: All right, we'll take a break. We'll be back in
11:05
Speaker 1: a moment, folks, because as you can see, Bo is
11:08
Speaker 1: right at the heart of how these changes are hitting
11:11
Speaker 1: property investors. Like you said, we'll be back in a minute. Hello,
11:26
Speaker 1: Welcome back to The Australian's Money podcast. James Kirby here
11:29
Speaker 1: with bo Arfy of the Maple Property Group. Now Bo
11:33
Speaker 1: for a professional investor with dozens of properties, that that
11:37
Speaker 1: ability to diversify makes endless sense at the best of times.
11:42
Speaker 1: Have to mention just now in the atmosphere we are
11:44
Speaker 1: in the local market and our listeners would all do
11:47
Speaker 1: that with their share investments. Much more difficult to do
11:49
Speaker 1: with residential properties, obviously, because it's a big ticket item.
11:53
Speaker 1: Looking at the market, now that we know where we stand,
11:57
Speaker 1: I think and I think we've seen hopefully all of
12:01
Speaker 1: the amendments and backflips that the budget will bring, and
12:05
Speaker 1: we have now a clear picture where CGT is going
12:08
Speaker 1: to be for property investors, where negative gearing is going
12:12
Speaker 1: to be, and also the unfortunately for many super funds.
12:18
Speaker 1: A second that was just reviving is not going to
12:20
Speaker 1: be nukes basically for political expedients. But from your point
12:25
Speaker 1: of view, which of those changes changes the market and
12:28
Speaker 1: what should investors be watching now?
12:31
Speaker 2: I would say that, well, capital gains tax is a
12:34
Speaker 2: big one. I would say that's a big one obviously,
12:37
Speaker 2: the negative gearing that we've got here, and I guess
12:40
Speaker 2: bringing it back down to Melbourne versus Queensland, you know
12:42
Speaker 2: a lot of people are asking at the moment is
12:45
Speaker 2: Melbourne and Victoria actually good value or is it a
12:47
Speaker 2: depressed market? And is it going to keep declining? I
12:50
Speaker 2: think that, you know, the sentiment, I think that Melbourne
12:53
Speaker 2: is probably where it needs to be in terms of writing.
12:56
Speaker 2: I don't think it's you know, necessarily a an incredible
13:00
Speaker 2: bargain or anything at this point. I think the uncertainty
13:03
Speaker 2: is factored into the price. But yeah, Queensland is again
13:07
Speaker 2: a very different market.
13:08
Speaker 1: Did you notice that in the clearance squeeze that's going
13:11
Speaker 1: on that the lowest clearance rets in the entire national
13:15
Speaker 1: market are in Queensland now in some sectors that are
13:18
Speaker 1: only thirty percent. What do you think is happening there?
13:21
Speaker 2: Yeah, that's interesting too. Well, the prices have inflated so
13:24
Speaker 2: much and they do still have some of the yields there,
13:27
Speaker 2: but the places have inflated. Queensland is it's at the
13:31
Speaker 2: top of its market cycle. It's had incredible growth over
13:33
Speaker 2: the last five years. Victoria's had virtually none, so it's
13:37
Speaker 2: topping out. Same thing. WA's still got a little bit
13:40
Speaker 2: more to it, but yeah, Victoria. I think everybody's just
13:43
Speaker 2: waiting to see if Vick and Melbourne's actually going to
13:45
Speaker 2: do something. A lot of people have got a lot
13:47
Speaker 2: of bets on Melbourne at the moment. Yeah, it's going
13:50
Speaker 2: to be interesting to say.
13:51
Speaker 1: It sounds to me like you're certainly not of the
13:54
Speaker 1: view that it's a red hot bargain, as you say,
13:56
Speaker 1: it's where it should be. Yeah, okay, Yeah.
14:00
Speaker 2: I think it's factored in people's concerns of the market
14:03
Speaker 2: and this kind of thing. I think when it changes,
14:05
Speaker 2: it'll change quick when interest rates. If you want to
14:08
Speaker 2: capitalize on something that's still got there'll still be some
14:10
Speaker 2: risk there, but it's I think it's not much of
14:12
Speaker 2: a risk at this point. I think it's dropped quite low.
14:15
Speaker 2: I think if you want to bet on, you know,
14:17
Speaker 2: maybe a favorable government coming in and overturning some things
14:21
Speaker 2: if you want to bet on maybe interest rates going down. Yeah,
14:27
Speaker 2: Melbourne's definitely going to be able to play in comparison
14:29
Speaker 2: to the other states, which are much more expensive.
14:31
Speaker 1: I was interested what you said about the Queensland market
14:33
Speaker 1: and Brisbane, and there has been this terrific momentum up there,
14:36
Speaker 1: and there's also been momentum links with the Olympics, but
14:38
Speaker 1: the Olympics is quite a bit away. There hadn't been
14:41
Speaker 1: a sense that was part of what was driving in.
14:43
Speaker 1: But interesting to hear you thought it was topping out.
14:46
Speaker 1: Tell us just a little bit more about your view there.
14:48
Speaker 2: I guess it's performed very well. Queensland a lot of
14:51
Speaker 2: people during COVID, a lot of people have left and
14:53
Speaker 2: moved to different parts of Queensland. I think now we're
14:57
Speaker 2: seeing people the stats are indicating that we're seeing people Sydney,
15:00
Speaker 2: in New South Wales and Queensland start to either cash
15:03
Speaker 2: out or relocate to Victoria where they can they can
15:07
Speaker 2: live a good lifestyle, maybe have a lower mortgage.
15:10
Speaker 1: It's remarkable because it used to be the other way around.
15:13
Speaker 1: I don't know if you remember that.
15:16
Speaker 2: Yeah, well, yeah, I've been investing for coming on twelve
15:19
Speaker 2: years now, I'm not that young anymore. And I remember
15:22
Speaker 2: for the longest period of time Melbourne and City were
15:24
Speaker 2: neck and neck. It was always a competition, Who's what's
15:26
Speaker 2: better Melbourne or Sydney, and always always like Melbourne is
15:29
Speaker 2: the best, you know, and you would always have this
15:31
Speaker 2: laughable kind of competition. Whereas I think, now, yeah, we've
15:36
Speaker 2: got some catching up to do.
15:37
Speaker 1: The price differential has never been so wide between the
15:39
Speaker 1: two cities, correct, Yeah. Do you think it'll inever to
15:43
Speaker 1: be narrow back to traditional levels because it's coming up
15:46
Speaker 1: on forty percent of the moment I believe we're in
15:48
Speaker 1: the high thirties. For traditionally it was something more like
15:50
Speaker 1: ten to fifteen.
15:52
Speaker 2: Yeah, I think traditionally traditional levels will take some time,
15:55
Speaker 2: I believe, but I think the gap will absolutely close.
15:58
Speaker 2: Sydney stopped. It's dropping slightly more than Victoria. I think
16:01
Speaker 2: the clearance rates are slightly lower than Melbourne's. And I
16:04
Speaker 2: just think I think Melbourne's got a bit of momentum there.
16:07
Speaker 2: I think a lot of investors are starting to look
16:09
Speaker 2: at Melbourne ones that have got a bit of appetite.
16:11
Speaker 2: I think owner occupiers will look at Victoria. I absolutely yeah,
16:14
Speaker 2: I would agree that I think the margin will close.
16:17
Speaker 2: I think massive. It's about as big as probably it's
16:21
Speaker 2: ever been, right.
16:22
Speaker 1: James, absolutely, yes, it is all right. Okay, folks, Well
16:25
Speaker 1: you heard it there from bo. I want him to answer,
16:30
Speaker 1: if you would, sort of questions that have been coming
16:33
Speaker 1: in since the budget from listeners about issues around the changes.
16:39
Speaker 1: So both day with us. We'll be back in a moment, folks,
16:41
Speaker 1: and we'll have some questions from Tara and Tony and Chris.
16:44
Speaker 1: All right, back in a minute. Hello, Welcome back to
16:52
Speaker 1: The Australian's Money Puzzle podcast. James Kirby here talking to
16:56
Speaker 1: bow our Feet, professional investor and advisor largely across the
17:01
Speaker 1: Australian market, increasingly offshore Ue and New Zealand. We didn't
17:06
Speaker 1: really talk about New Zealand before we go to the questions.
17:09
Speaker 1: There are very different markets. I imagine you trained very
17:12
Speaker 1: different things in those two markets. What are you very briefly,
17:15
Speaker 1: what are you trying to achieve in both? Are they
17:19
Speaker 1: different targets in those different markets, New Zealand and Dubai.
17:22
Speaker 2: Are you absolutely first and foremost South of New Zealand
17:27
Speaker 2: operates very different to the mainland of New Zealand, so
17:30
Speaker 2: he is down is a luxury market, some of the
17:32
Speaker 2: most expensive properties in the whole country. Great thing about
17:35
Speaker 2: being an Aussie investor and being an Aussie in general
17:38
Speaker 2: is we can move there very easily. They welcome us.
17:41
Speaker 2: The other thing is we can get loans there around
17:43
Speaker 2: seventy to eighty percent. Loan to value ratios are very common.
17:46
Speaker 2: So there's people who are sitting on a ton of
17:48
Speaker 2: equity in WA and Queensland who can very easily do
17:51
Speaker 2: the relocation thing if they like, if they so choose,
17:54
Speaker 2: obviously personal preference. And then the other thing is there's
17:57
Speaker 2: no capital gains tax, there's no there's no stamp duty
18:01
Speaker 2: actually in New Zealand, and there's a lot of It's
18:03
Speaker 2: got a lot of things going for it. The dollar
18:04
Speaker 2: at the moment is about as strong as it's ever
18:06
Speaker 2: been in the last ten to fifteen years. As well,
18:08
Speaker 2: it buys one Izzie dollar buys around one twenty two
18:12
Speaker 2: a US, so it's quite strong. Their properties are chieved
18:15
Speaker 2: for us at the moment.
18:17
Speaker 1: The luxury market you mentioned was Queenstown, was it Bill correct? Yes,
18:20
Speaker 1: right right, as opposed to Auckland. Yeah, Okay, what's the
18:24
Speaker 1: specific attraction of that zone.
18:26
Speaker 2: Well, first of all, rental yields are quite good. I
18:28
Speaker 2: think they've made them as you could call it a mistake,
18:31
Speaker 2: but I think they've made the mistakes that that our
18:33
Speaker 2: governments have made already. They've taken away negative gearing, they've
18:35
Speaker 2: backflipped on it three years later. They knew it was
18:37
Speaker 2: a disaster because the rent's pushed up so dramatically in
18:41
Speaker 2: New Zealand. So but they backflipped on it. And I
18:43
Speaker 2: think that it's a good diversification play outside of Australia,
18:47
Speaker 2: you know, outside of going to Queensland and WA's. It's
18:50
Speaker 2: a very it's an easy it's an easy diversification across
18:52
Speaker 2: the pond.
18:53
Speaker 1: They welcome us and very interesting. Haven't really explored that before.
18:58
Speaker 1: If you want to hear more about that, folks right
19:00
Speaker 1: in the money puzzle at the Australian dot com dot au. Okay,
19:03
Speaker 1: so the questions, Tara says, I have a couple of
19:06
Speaker 1: questions regarding the budget changes. I'm confused, along with everyone else,
19:10
Speaker 1: is there a CGT exemption for new bills if it
19:15
Speaker 1: is new or is this for negative gearing only. I'll
19:18
Speaker 1: just jump in ahead their boat, of course, it's not CGT.
19:20
Speaker 1: There is no CGT exemption for new bills. CGT is
19:23
Speaker 1: CGT applied to all buildings equally, folks, Unless I'm wrong there, boat,
19:27
Speaker 1: that's how it goes, I think, yeah.
19:30
Speaker 2: And nothing's been fully legislated at this point.
19:32
Speaker 1: Good point, nothing's been fully legislated. But as we said
19:35
Speaker 1: at the start of the show, it really looks like
19:36
Speaker 1: it's going to happen broadly as planned, with the exception
19:40
Speaker 1: of the small business widening of the turnover and the
19:43
Speaker 1: elimination of SMSF lending as a sort of price that
19:47
Speaker 1: the Greens have extracted from the government. Tara's second question
19:50
Speaker 1: is what happens if my property is actually worth less
19:53
Speaker 1: than I voted for? This is infornation to CGT. The losses,
19:58
Speaker 1: what can people do with them?
20:01
Speaker 2: Sure, so it depends entirely if it's in your personal
20:03
Speaker 2: or aim a trust or in a company, so yeah,
20:07
Speaker 2: we know inside trust. Now there is the minimum thirty
20:10
Speaker 2: percent tax that's going to apply and the indexation, but
20:14
Speaker 2: that only applies to the capital gain. So if there's
20:16
Speaker 2: no capital gain then there's nothing to apply there.
20:20
Speaker 1: But if people have losses, they're only allowed number losses
20:22
Speaker 1: as I believe, and this is something of an issue. Obviously,
20:25
Speaker 1: if you were made a loss of property and you
20:28
Speaker 1: weren't you know, a sequential investor, then those losses wouldn't
20:32
Speaker 1: be much good to you. I understand.
20:34
Speaker 2: Yeah, they're ring fenced as well. They wouldn't be able
20:36
Speaker 2: to get carried forward obviously if you didn't continue to invest,
20:39
Speaker 2: if it was your last purchase. You certainly need to
20:42
Speaker 2: be mindful of what stage of your lifestyle you're in.
20:45
Speaker 2: You know, we've got accumulation, we've got consolidation and preservation,
20:48
Speaker 2: you know, and consolidation, you want to have more of
20:50
Speaker 2: those cash flow assets. Ideally you don't have to sell.
20:53
Speaker 2: And when you're in your accumulation, ideally you sell what
20:55
Speaker 2: you need to. But it's it's made it tougher now
20:57
Speaker 2: you really have to have more strategy. You can't just
20:59
Speaker 2: throw data pinboard expect to get a good result. It
21:01
Speaker 2: absolutely doesn't.
21:02
Speaker 1: Happen now, Okay, I hope let's use for to utara
21:06
Speaker 1: as I say. There is no CGT exemption on the
21:09
Speaker 1: new bills. Okay, and this has never advised. This is
21:12
Speaker 1: information only, and the losses on CGT well or they
21:16
Speaker 1: only accept a noumena losses. So if you met a
21:18
Speaker 1: real loss, that is, let's say you property did nothing
21:21
Speaker 1: for years, you made an effective loss. I'm afraid you
21:24
Speaker 1: just have to wear it, as I understand it, all right.
21:26
Speaker 1: The question from Tony is there any clarification yet on
21:29
Speaker 1: how the negative gearing restricted to new bills will affect
21:32
Speaker 1: subdivisions or granny flat. I bet you're seeking that clarification too,
21:37
Speaker 1: But what do you understand?
21:39
Speaker 2: Yeah, the understanding that we've got at the moment is
21:41
Speaker 2: if you're creating new supply, then there should be some
21:44
Speaker 2: negative gearing benefits. I've had people from other companies trying
21:48
Speaker 2: to say that you can't claim the Gronni flats under
21:50
Speaker 2: negative gearing. But I would suggest that if you had
21:53
Speaker 2: a granny flat there anyway, that you wouldn't be negatively
21:56
Speaker 2: geared because it's going to be positive there anyway. So yeah,
22:00
Speaker 2: I would say it completely depends on the kind of.
22:02
Speaker 1: Asset, Okay, Right, It depens on and I think it
22:06
Speaker 1: is some. I think the Treasure has said that they
22:08
Speaker 1: will issue a paper sooner or later on these issues
22:11
Speaker 1: and then legislate on them to make them clear. So
22:13
Speaker 1: I think you just have to wait only for the
22:15
Speaker 1: final reading on that. Finally, from Chris, the following situations
22:19
Speaker 1: are common for investors in apartments. Could you answer this question.
22:22
Speaker 1: Our body corporates arrange for external painting of all apartment
22:26
Speaker 1: buildings and also replacement of failed guttering for most of
22:29
Speaker 1: the twenty apartments in our complex, especially levee was necessary.
22:34
Speaker 1: Is the levee deductible in its entirety in the year
22:37
Speaker 1: of issue or will it become a capital deduction applied annually.
22:42
Speaker 2: I would argue it depends completely on Yeah, obviously if
22:44
Speaker 2: it's maintenance or if it's so if it's maintenance or structural,
22:48
Speaker 2: then it's going to fall into being able to be
22:50
Speaker 2: deducted immediately, where if is it something more so cosmetic,
22:53
Speaker 2: then that's going to be have to depreciate it over
22:56
Speaker 2: a forty year period out of two and a half
22:58
Speaker 2: percent rate per year. So it sounds to me like
23:01
Speaker 2: that's definitely maintenance in terms of the guttering side of things.
23:04
Speaker 2: So I would suggest that the guttering is probably in
23:07
Speaker 2: a special levy is probably texted out the BOK straight away.
23:10
Speaker 1: Okay, Chris, hopefully that's useful to you. Thank you everybody
23:13
Speaker 1: for tuning in today. Thank you very much Bo for
23:16
Speaker 1: being right on. I love put the news because I
23:19
Speaker 1: hit him with this changes to MS folks about five
23:22
Speaker 1: minutes before we started the show, but well across it.
23:25
Speaker 1: Thank you very much, Bo. Very interesting to talk to you.
23:27
Speaker 1: Best to work with your adventurers. I hope you don't
23:29
Speaker 1: pull the whole thing over to New Zealand and the UEE.
23:32
Speaker 1: But interesting to hear where you're coming from today.
23:35
Speaker 2: Thank you, James. Great to chat. That was Bo.
23:37
Speaker 1: Rfi folks from the Maple Investment Property Group. Okay. Today's
23:42
Speaker 1: show was produced by Leah Sammerglue. Thank you for listening.
23:46
Speaker 1: Let's have some more correspondents. Always welcome the money Puzzle
23:49
Speaker 1: at the Australian dot com dot au. Talk you soon.
24:01
Speaker 1: Four