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Re: [ProgSoc] SSH keys problem



On Saturday 20 May 2006 12:47 pm, Nigel Sheridan-Smith wrote:
 ] Negative gearing is getting yourself in debt and losing money
 ] so you save on tax.

 Exactly so.  There may be one or two situations in which it makes
 (financial) sense to adopt this approach, say if there are highly
 specific instances of the law that you wish to take advantage of.
 For example, the 'I have to visit the property each year to inspect
 it and the costs incurred are a deduction' clause -- very handy if
 you buy a cruddy little place somewhere near your yearly holiday
 destination.  A couple of years ago a friend was looking at doing
 something similar with a place in Canada.  Given property can be
 jointly owned by several people, the dollars would have worked out
 pleasantly amongst the people involved.  Non-skiers need not apply.

 But yes, this society encourages citizens to be in debt, and a lot
 of people are under the illusion that if you pay less tax, then you
 must inherently be getting more money -- which is clearly not
 the case.  However it plays into the emotional response that
 people generally have towards taxation, and all of it built on
 the foundation that the vast majority of people think there's a
 linear correlation between money and happiness.

 ] Positive gearing is the property paying for itself - the money
 ] you earn from rent pays for the loan, maintenance, tax, etc,
 ] and you still take home a bit of money in your pocket.

 Again, exactly so.  An accurately identified pos-gearing opportunity
 will also result in a decent return (10% pa) on the net worth
 of the property, also, just in case a sale is ever contemplated.

 (For young players -- one of the key mantras for those investing in
 property is 'never sell'.)

 There are groups that can provide you reports on these kinds of
 opportunities -- they go back over 10-20 years and look at the VG
 figures for various parts of the country, as well as figures for
 rental availability and average rental income for those areas too,
 and come up with some recommendations.  These reports will cost you
 a few hundred dollars, but if you're about to spend $100k on one or
 more properties, this seems a trivial expense.

 Plus it's deductible.  ;)

 ] This approach doesn't mean buying a
 ] $500K+ property, but doing the appropriate homework ...

 Most of the locations that one of these reports that I saw were
 recommending, were in fairly small towns (f.e. Scone, at the top
 end of the Hunter), and were priced around $150k and up.  Certainly
 there's very few, if any, examples of pos-gearing opportunities in
 any of the metropolitan areas along the east coast -- pos-gearing just
 can't work in any area with over-inflated real estate prices.

 Other homework would include looking at primary production, and
 considering long-term factors .. f.e. future reliance on coal, nature
 of the mining workforce, that kind of thing.

 Of course, most property investors are happily ignoring the fact that
 90% of (housing) property in Australia will be under water within
 two generations.  Yes, they'll be dead, but between now and then
 there'll be a nasty dip in the market as people start to ack this
 likelihood, and it's a gamble as to when this will happen.

 I always like to end on an upbeat note.

 Jedd.

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