Time to ponder?

Well you would have quite a few people selling an unencumbered property worth 1.1mill for $995k. The tax would then be avoided, and you would get a drop in property prices.

If the estate was worth $1 million and had mortgages to $800k would the tax be on the whole amount or on the 'profit'. You'd then create a class of people who couldnt afford to inherit due to taxes….

D

As a form of tax evasion, yes it's conceivable that this could happen, and we'll get a temporary drop in median prices in suburbs where most of the houses are selling for slightly over a million dollars. Temporary in the sense that there may come a time where buyer activity will recover in such suburbs because people will see 'value for money' (because houses are selling for less than they're actually worth) and send prices further beyond the magical 1 million dollar mark.

This of course assumes that the ONLY asset in the inheritance was the house, hardly the case with most boomers, I suspect. They usually still have some savings, some shares, maybe a few bits of gold and diamonds or other valuables stashed away…

Which leads to the next question: How exactly do we plan to fairly value all of these belongings to determine if their total value exceeds $1 million and hence liable for a 20% tax? Or are certain objects exempt from the calculation of total value of an inheritance?

If a house is involved and there is a mortgage on that property, does the property HAVE to be sold in order to realise a profit or a loss and count that in as part of the inheritance?

Not sure if rent caps are a good idea – seriously, they might restrict growth outside of the capital cities. However, rent caps in conjuction with a phasing out of NG and CG tax exemptions – that may work.

Usually I just read the muddle of good, bad or just plain confusing conversations that go on here, but this eeejit really got me!!

Falling house prices good??? Do you own a home? tell that to the poor sap that just got a loan of 500k for their new pride and joy valued at 560k, lucky them they had skrimped for ever to get the deposit, mum and dad had put some in to help them get their first home. The first home grant was a bonus but the price of the house was probably jacked up by that much anyway. They can just get by if they are reeeealy careful with the massive mortgage, so long as they don't have any bad luck and they both keep their 6 jobs each. But wait! 2 years later and things start to tip a little sideways, the economy is getting rough, they're fine though. They have been able to make extra little payments every now and then. Ooops, she is pregnant. Time to do up a nursery. Let's see the bank and extend the mortgage to pay for the reno. What! Oh no! house price have fallen and their house is only valued at 490k now. How can that be? they ask. Well, the housing market was over inflated and with the downturn in the economy the housing market has re adjusted to somewhere near where it should have been but sorry, you owe more than your house is worth. But it's ok, falling house prices are a good thing!

1. CGT of 20% on PPOR if sold under 10 years..with exemptions for legit reasons. Don't make me laugh! Firstly to set up yet ANOTHER government department to collect, police etc this would cost us a bucket load and for what, anyone with half a brain would do what we all do best…Lie through their teeth!
2 and 3  Land tax, you big hearted darling!    so on top of all the expenses associated with maintaining a home, the mortgage payments, the rates, insurances, etc, and then trying to find the money for food, school fees, clothes, fuel, medical bills, so on and so forth, you want to slug the poor bugger who thought that by owning his own home he was providing security for his family another piddling little 1.5% . Per year?!  Very generous of you to allow pensioners and low income earners to accrue this until selling their house. Leave it long enough and they won't get anything when they do sell it! And when they do you added DEATH DUTIES! so not only do they cough up all that luvly lolly to the government but their kids have to add to the coffers as well! well done. Oh sorry, that's right only on estates worth over 1mill. Why discriminate? I'm sure thoe poor sods who busted their chops to pay for their homes that are a little higher up the value chain will no doubt appreciate the fact that all the effort they put in to provide for the future generations will just have cost them a whacking great bill. Why do you think most the great English Estates are pretty much bancrupt after having had to be successively chopped up into smaller and smaller parcels till they are nothing more than some decaying relic the family can't afford to maintain,(if they managed to keep it), the original means of income, namely the land, gone. I can just hear all the Aussie farmers now. Did you think about them when you dreamed this up? The next generation saddled with a massive bill before they even get started just because the dirt they are trying to eke an existence out of is valued by some moron in a suit to be worth so much. You can't eat dirt sunshine. All this will mean is that the small cocky will fade into oblivion and the multinational will rule, and by the way, a huge part of our agricultural land isn't owned by australians anymore anyway. So when the Chinese, Brazilians and other overseas corporations own ALL of our agricultural land you will have lost your death duty revenue totally.
4  the only good idea you had
5. So, you want the poor old soul to flog off their home and if there was anything left after you have ripped the accrued land tax bill off them, you want them to have to move in with the 'lations or even some random young couple, (i'm sure they'll be rapt with that idea!) Aah yes the paltry balance left over from the house, that will pay the lovely couple from number 5 some rent, tax free too, that 'll be nice. For how long? Granny might have another ten years of good living to do yet. And they'll get another 5k for the good deed of providing her with a room, why? they're getting rent income tax free. Granny will need it more than them! What is wrong with single occupancy? we spend years just praying for the day the damn kids move out, what makes you think we want to move in with THEM?
6. don't know what NG is but so far 99% of your ideas are up the creek so why wouldn't this one be.
7. 20% GST, why? Increase the tax free threshold to 40k and then increase welfare! as much as I'd like to earn 40k tax free it'll never happen. You propose the governmet will fund the increased welfare payments from the 10% increase in GST do you? The largest proportion of wage earners in this country would most likely come in under the 40k income bracket. This is my view not a figure from any journal, statistic blah blah.  The supposed average wage the statisticians like to spruke of something like 600 per week is a myth to the average Joe. I thought I was doing really well when I got up to 36k then life did it's usual little burp and it went back down to nearer the high 20's.   What was that? get a different job? country town sunshine, not much scope here! even less if you not male!
8. just what we need, another LAW. who is going to police that one? and what a can of worms you open there. If you make a law to restrict rent increases to a certain percentage then why not do the same to supermarkets prices, fuel prices, clothing mark ups. Anything that has supply and demand fluctuations? Lets bang in another law to stop someone from making a buck! why not make them all justify their markups. Make them account for every cent and if they make over a certain percentage in profit, let's make them drop the price!!!
9. a 3% reduction in PAYG would not be enough to make me stay in a bad relationship. What about defacto or same sex relationships, do they qualify?  Again, how do you check that people are not lying? What is so good about staying married? why does that need a reward? that one is about as good as paying girls to have babies!
10. define permanent. The deceased's relatives get it? that's the only way you will know when permanent is up. Got a HECS debt have you? I'd rather they came back and paid the damn thing off, that's government money. Government money is OUR money! I assume you are expecting that they will come back and work, not go on the dole or be a life time student!

Hmmmmm

Welcome nevertoolate,

Stay forever my friend. This forum is full of thread such as these, and the property bears live in the caves just as much as the property bulls live in the lush green paddocks.

I have to say, no death tax thank you. We all know that governments have a great history of spending our money, and how do you know any tax such as this will go to the welfare system, you don't. Politicians never lie, are always wise, and always know what's best… don't they?

The only real way to correct house prices (if you would like to do that) is by increasing supply. And I'll tell you about local councils, they DON"T want development. In Victoria you can have a look at all the cases headed to VCAT in order to have new units/houses built. From experience, it takes 12 months in some councils just to get rejected and then 6 mths to head to VCAT. You must pay all this time, the bank, the council, the architect. Then when it gets approved (if ever) you must pay the same council who didn't want the development 4-8% depending on the council. Then you have to pay the agent to sell it, the buyer pays the government in huge stamp duty. Oh don't forget about GST you have to pay that too if you are building new houses (not all the time but that's another rant) That doesn't even count the huge price you paid for the land, due to it being able to be developed in the first place and fair enough that Granny should get her money for the kids too.

Is there anyone I forgot to pay? THIS IS THE REASON HOMES COST SO MUCH. The lack of supply combined with the huge amount of costs that need to be paid on every development is exactly why houses cost what they do.

The message is simple increase supply, remove some of the layers of costs and affordable housing will be born.

By the way, I'm not saying increase supply to the USA levels so that we crash and burn, more a streamlining of the planning schemes in each state and monitoring of housing supply and demand. That way something like what happened in the Gold Coast or Docklands with oversupply wont happen.

Here endeth the rant.

D

Paulk,

I think it is excellent that you have high liquidity and the ability to buy when ready, I think many would be envious. I hope you won't leave it as cash for too long.

Which particular market are you looking at? I think we'd all like to avoid the falling market. Would that be Vic, or NSW, or WA or territories, would that be regional, city, sea-change and would that be industrial, commercial, residential. Oh and are we talking apartments, units, houses if residential?

I don't think anyone should buy in a falling market, but not all markets are the same. A smart person takes an opportunity when they see it.

As to the comment about supply, then by your suggestions, we should have no problems with supply and therefore see quite a sharp increase in supply in about 20-30 years due to generational death (sorry no nice way to put that, my parents are in this group too). We therefore, do not need an increase in tax, or any other input in welfare or the like. A large part of the population will be deceased easing the need for spending on health care etc. Goods and Services will be cheaper as demand has fallen. There will be plenty of jobs due to a large segment of the population no longer needing those jobs, freeing up space for those on welfare to become fully employed.

Therefore, as you have reminded us about the cost of living, that cost should be reduced for the following generations due to an ever shrinking population.

D