Forum Replies Created
Hi battz
“Pretty harsh words, do you have any evidene to support this claim? If so I’d be interested to hear it, as I certainly dont want to waste my $1000 – $2500 to attend a property course if its full of lies.”
Steve is a CPA and IS qualified to give advice. The comment was not directed at him. If you can list any of the other promoters out there and their relevant qualifications I will be happy to stand corrected.
“You believe that all your students would actually lose money on property investments?”
In generel, yes. There are bugger all positive geared properties left. This means students would either have to buy nothing or negative gear. Will they lose money doing that? I believe they will. Just my opinion.
Hi minimogul
the argument err discussion is about property vs shares, not positive geared property vs neg geared property. If you bring up a point supporting the property view, make sure it does not also support the shares view.
“Not necessarily – you can fang profits and losses every which way to suit you and your family, with property and the right structures”
can do the same with shares, point neutralised
“ahm,,,,,,*giggles* are shares people more likely to be desperate due to a few margin calls – so they’d *need* their stuff to be liquid?” 85% of share investors do not gear, secondly very few people sell when they get a margin call.
“Hmmm….I am not planning on buying anything that will return me less than 14 percent. after all costs. At the moment I am sitting on three yielding 20 percent and that’s not counting capital gain which could be ?????.”
Again, the discussion is about property in GENERAL vs shares. We can argue all day about individual propertys vs individual shares.
“but then we (the average people) might not be sure of the exact difference?”
Possible, but if people know the difference between property trading and property investing they can folow the same logic.
“yeah but depreciation write-offs etc make it pop back up”
Oh no! another ‘losing money is a good thing cos you get some money back from tax’ argument. Nuff said.
Oh and I forgot:
You can quite easily receive a $3,500 refund from the taxman every year by using a simple share strategy, thanks to a loophole left from a 1987 tax reform.
A lot of people bagging out what they don’t understand.
1. Shares are not more volatile than property. This is a myth. If properties were revalued every day instead of once a quarter you would see massive volatility. Volatility breeds OPPORTUNITY. Try making money from property in a flat market and see how far you get.
2. Shares have greater liquidity. You can sell a few or all of your shares in minutes, and wont have to suffer a loss on a desperate sale. With property you cant sell off a bedroom when you are desperate for money, if you are desperate, you have to sell the whole house, which costs many thousands of dollars and may force you to sell very cheaply.
3. Leverage. Shares can be leveraged MORE than property. The highest LVR on shares is 99%, in property it is 95%.
4. Rental income suffers from erosion due to maintenance, depreciation, management costs, insurance, advertising, vacancy periods, rates et al. Shares have no such costs.
5. Franking credits. Dividends are a tax-paid investment (assuming average wage). Rental income is taxed.
6. There are at least 45 seperate things you can do to improve the return from shares. How much return you get is entirely dependant on your financial education and effort. Visit my website http://www.posigear.8k.com where you will find a course on how to do it.
7. History shows shares return 13% while property returns 9%. Compound that!
8. Share trading is NOT share investing. I believe share trading is a mugs game, like property trading is. I dont teach share trading, in fact I actively discourage it because 95% of traders go broke. There are better returns to be made by “selling shovels in a gold rush” or positively gearing shares.
9. Shares CAN be bought for less than market price, IF you know how. I have an example on my site.
10. You can unlock the equity in shares in real-time, you dont need to ask the bank manager for permission to borrow more money.
I could have bought $430 million bucks worth of property too if I gave a seminar every day and charged each person $15k.
There was a discussion about yield vs capital gains. I think it was Margeret Lomas who said “5% C.G and 10% income are not as good as 10% C.G and 5% income.”
The support for their argument revolved around the compounding effect of the capital gain. This is an unfair and inaccurate argument, because the extra 5% income could be invested at the same rate of return and compounded. Instead, they completely ignore the returns that could be gotten from this cashflow. BOTH investments return 15% p.a. The difference is, one starts with 10% guaranteed return and the other starts at 5% guaranteed return.
I know which sounds like an investment and which sounds like a gamble.
Wayne
Thanks for your example, but you didnt really answer the question. I need to know what the *advantages* are. Negative gearing can make money, but I need to know how it can be *better* than positive gearing. If it isnt, then there is no advantage. In your example, if the div yield was 8%, that would make it positively geared. I cannot see how the negative geared example is better.
Nobody has said that you cannot make money by negative gearing. Its just that you can make a hell of a lot more by positive gearing.
“I think we are talking cash positive but with a tax loss due to depreciation of building/fittings etc.”
If you are receiving positive cashflow, but claiming depreciation, capital growth is obviously not your goal. Claiming depreciation reduces the capital base, which increases the CGT upon sale. Unless you dont plan to sell, in which case shouldnt you be worrying about rental yield instead? Secondly, this method sounds more like neutral gearing than negative gearing.
Fester
“most of my properties are -ve geared BUT +ve cashflow”
And just how do you get negative gearing from positive cashflow? I think you forgot that negative gearing requires a ‘negative’ part.
All you bunnies who think neg gearing has advantages, STATE THEM. Provide worked examples. Give us evidence, not opinion.
Theres nothing I hate more than a tight ass millionaire.
PAY for professional advice ya freak!
the story was about share trading
its really quite irresponsible to promote such a story, but thats journalism for ya
nevermind, it will help my book sales soon lol
when people start asking this question, its time to ask “how much will they fall now?”
What happens if you trade for a few years then stop trading, can you stop the BAS statements?
Why do you make it sound like you must choose one or the other?
why cant you save $1000 in tax, pay $600 in health fund fees, AND invest in an IP? the $400 you save will HELP you pay for an IP, not STOP you from buying one.
ps you did say “outskirts of Sydney” not NSW regional.
“Just to avoid this I don’t want to waste my money on any private health insurance (as my aim is not just to avoid tax, it is to be profitable from all angles).”
Ummmm im a little confused here. You would rather pay an extra $1000 in tax (1% surcharge on 100k) than pay around $600? for the cheapest approved health plan? You are throwing away $400 a year plus not having the benefits of the health plan. theres no law saying you need to buy the ferrari of health plans.
Why you would want to ‘invest’ in a negatively geared Sydney property also confuses me. prices are on the way DOWN!
I like the managed funds idea though.
Harold
after much reading and thinking (my brain hurts) I think I know what you meant.
converting a warrant to a share is simply restructuring a loan, you are not selling anything so there is no capital gain, and therefore no CGT.
‘cash extraction’ may be what you were referring to, where you can convert shares into instalment warrants (taking out a loan) thus keeping the difference. this is an alternative to selling where a CGT event would be triggered.
the funny thing is, that opens a loophole. if you sell a warrant and buy another, you pay CGT. but if you convert them into a share, then convert them back into warrants you pay no CGT. which is the way it should be, as you are not actually getting rid of the asset.
Hi Harold
I have read a lot about instalment warrants, but have never been told they are tax free when converting. This doesnt mean you are wrong, its just odd that such a huge benefit (if true) would be omitted. I scanned through my textbooks but couldnt find a definate answer, may I ask where you got your info from? Im very interested in finding out.
Perhaps an accountant here can help?
ABN is free from the ATO.
Once you get one you have to fill out a form every quarter.
A no doc loan isnt that great, you need around 80% deposit. LOL
the caveman started writing his story on rocks, and selling them to other cavemen, but they came back and thumped him with the rock because there were no more caves to rent out. it took 11 seconds for the caveman to work out rocks hurt.
11 seconds?
lol
