RR Phantom
Location : Wasted Space
Job/hobbies : Cayman Islands Actuary
 |  Subject: Funny: OZschwitz diary of a first home buyer, week 6: Home sweet tax shelter  Sat Oct 28, 2017 6:23 pm | |
| Dear diary,
You recall last week I was quite overwhelmed by all the nasty, hidden costs of home ownership.
I can only assume some spy at the Productivity Commission has stumbled upon these precious pages and taken pity on me. This week they recommended the abolition of stamp duty!
The productivity gods have heard my prayers!
I can only hope for a speedy introduction of such a worthy policy. But I shan't hold my breath.
In the meantime, it's true I remain quite dispirited by the mounting costs I face: the stamp duty, the lenders mortgage insurance, the conveyancing fees.
So this week, I've been trying to dwell on the positives of dwelling ownership.
More specifically, the great tax dodge I am about to embark on.
For many years now, like a mug, I've had my money sitting in an online savings account, generating pitiful interest, while paying my full marginal tax rate on any meagre earnings.
Former treasury secretary, Ken Henry, also took pity on me in his tax review, recommending people like me should enjoy a tax deduction on my savings earnings, to put me on par with the tax discounts on shares and property. Former treasurer Wayne Swan had a go at implementing it, but got mugged by that nasty Global Financial Crisis.
But no matter.
Because I know that when I do finally enter those hallowed halls of home ownership, I will have bought myself a ticket to the greatest tax minimisation scheme ever invented.
The great Australian dream? The great Australian tax dodge, more like. For those who can afford the entry price.
Immediately, any gains I enjoy in the value of my savings will be completely tax free. House prices go up 10 per cent? Fabulous. Put that in my pocket and keep it there. Capital gains tax free, baby.
Should I enjoy great success in life, and one day purchase a second property, perhaps I'll rent out this modest abode.
If my rental costs do not cover my mortgage and other costs, I'll be able to claim any difference as a deduction against my taxable income. Negative gearing, baby.
If I need to replace a fridge. I'll tax deduct it. If I need to visit my property to nosy parker on my tenants, I'll tax deduct any costs incurred. If I need to use a real estate agent, I'll tax deduct the cost of those fees.
And one day, it'll be time to retire and enjoy the good life.
When that day comes, I'll most likely need to use my super nest egg to pay off my mortgage – if they still let that happen by then. I may ruefully wonder what the point of superannuation was, if it just kept me out of the home ownership market for longer and denied me the supercharge gains of the 2012 to 2017 property boom.
No worries, I'll be able to make do on the pension. Unless, of course, there's so many old people by then, and so few of my child's generation to fund it, that it's not sufficient to get by on.
But if the rules stay the same, I'll be able to tax dodge again. My coveted family home will be excluded from the pensions assets test, meaning it won't be included in any test of my eligibility to receive the part or full pension.
Happy days.
I expect, being a compassionate sort of person, I will stop and spare a thought for all those not lucky enough to get a foot on the property ladder, those still living in the private rental market in their retirement.
I'll hope policy makers heeded the calls from economist Saul Eslake that home ownership, as a pillar of the retirement savings system, has long since crumbled.
I'll hope that all those clever clog "rentvestors" – people choosing to rent and invest their money in shares, considered the retirement implications of such a strategy.
And then I will rest and enjoy my retirement, until one day I'm able to use my fully paid home as bond on a comfortable aged-care facility.
I'll look back and realise that the entire system was set up to encourage me into home ownership. That I was lucky enough to get a foot in the door of the greatest tax dodge in history, when many others couldn't.
It's what the famously tax-averse Kerry Packer would have wanted.
SAVINGS UPDATE
So, my detailed spending diary reveals I spent almost as much on alcohol this week as I did on food, partly due to the $50 bottle of champagne I took to a party. Dear diary, don't make me give up the booze – or parties! OK, I'm willing to compromise. Resolution No.5. I'll only buy bottles worth $20 or under. May excess tannins forever burn my tongue, I will own a home.
http://www.smh.com.au/comment/diary-of-a-first-home-buyer-week-6-home-sweet-tax-shelter-20171027-gz9za1.html
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