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518 | The Costly Mistakes Property Owners Make in Their Tax Returns (and How to Avoid Them!) – Chat with Rob Thomson

By in Podcast, Property Investment

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Folks, in this special episode we’re becoming a fly in the wall to reveal the inner workings of the Australian Taxation Office (ATO)!

Allowing us to do so is Rob Thomson, Assistant Commissioner for the Experience, Government and Case Leadership-Individuals and Intermediaries and the official Tax Time spokesperson at the ATO!  

With over a decade of experience, including a stint as Minister Counsellor at the OECD in Paris, Rob brings a wealth of knowledge on the ins and outs of the Australian tax landscape. 

Today, we’re picking his brain to give you a sharp look into the world of property tax, compliance, and the latest changes to regulation that every property investor needs to know. 

Here’s what we cover:  

  • The ATO’s Latest 2021/22 Data 📊 — How many Australians are investing in property, average income reported, and the most common deductions!  
  • Self-Assessment 🧾 — What does it mean, and how the ATO audits your tax return. 
  • Data Matching & Audits 🔍 — How the ATO tracks rental income and expenses, and the surprising mistakes landlords make. 
  • Foreign Resident Capital Gains Withholding 🌏 — Upcoming changes on 1st January and what you need to do to avoid a hefty 15% withholding on property sales. 
  • Claiming Borrowing & Interest Expenses 💰 — The ATO’s latest tools to help you claim accurately and avoid over-reporting deductions. 

For Rob’s expert advice into navigating the complex world of tax and staying compliant, tune in to this episode now! 

Free Stuff  

  • COMING SOON: Moorr’s Greatest Evolution!
    Over 11 million data points are set to be released in early November in Moorr, your all-in-one, free money management solution. Login or create your account now >>
  • Australia’s first property AI to be released next week!
    After months of hard work, we’re launching Australia’s first property AI. Ask your burning questions and our AI assistant will pull up all the relevant episodes, courses, books and more related to your query! Stay tuned for its release next week 🙂  
  • Latest ATO’s tools and articles: Stay informed and maximise your tax savings with the resources below…  

     

  • Guests & Episodes Mentioned:   
    Bradley Beer: Chief Executive Officer of BMT Tax Depreciation  
  • Resources from Ben’s “What’s Making Property News”:  
    Eviction of a tenant from a rental property 


    Timestamps  

    • 0:00 – The Costly Mistakes Property Owners Make in Their Tax Returns (and How to Avoid Them!)  
    • 1:08 – Moorr’s greatest evolution and Australia’s first property AI!?  
    • 8:50 – Mindset Minute: “The rules are not there to restrain you, but to reveal new paths for growth and opportunity.” 
    • 10:17 – Welcome Rob Thomson!  
    • 11:55 – Money Story: Festival or drum kit? 😉  
    • 17:33 – The pivot from not-for-profit to the taxation office  
    • 20:13 – The headline figures from the Australian Taxation Office (ATO) 2021/22 data 
    • 24:24 – Why do these numbers matter?   
    • 25:52 – Lag data EXPLAINED 
    • 26:20 – Self Assessment: How does the ATO review your return?  
    • 30:03 – What data does the ATO have on rental properties?  
    • 32:45 – The most common mistakes property investors make  
    • 38:48 – What is the difference between repairs and improvements?  
    • 41:04 – Folks, the timing of when you repair matters! Here’s why.  
    • 43:25 – How to break up the cost of your depreciating assets  
    • 48:15 – The 1st January changes that will affect ALL Australians 
    • 51:03 – What happens if you don’t get a clearance certificate?  
    • 55:48 – How the ATO’s new Borrowing Expenses Calculator can help you!  
    • 58:28 – The $420M problem: Over-claimed interest  
    • 1:01:51 – Everything you need to know about the tax gap  
    • 1:04:15 – Pay As You Go (PAYG): Automatic vs. Voluntary entry  
    • 1:06:57 – Why use PAYG? 
    • 1:08:52 – Rob’s top tax tips and comments  

    And… 

    • 1:12:54 – Thank you, Rob!  
    • 1:15:55 – Lifehack: Embrace the toolkit available to you! 
    • 1:17:40 – WMPN: What does New South Wales’ No Ground Evictions actually mean??

     

TPC Gold | How to Beat Insecurity: 4 Tips from Life Coach Jaemin Frazer

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In today’s bonus episode, Bryce sits down with life coach, author, and founder of The Insecurity Project, Jaemin Frazer, to explore some game-changing practices for overcoming insecurity and living your most authentic life.  

Dive deep into topics like: 

  • Stepping into the light and confronting your reality. 
  • Taking 100% responsibility for the stories you tell yourself. 
  • Stacking the pain to fuel meaningful change. 
  • Creating a compelling vision to inspire action and prevent setbacks. 

Jaemin also unpacks the magic of midlife as the perfect time for change and reveals the dangers of unfulfilled dreams and ambitions. 🕰️ 

If insecurity has ever held you back or if you feel stuck, this episode will give you the tools to rewrite your story and unlock your true potential!  

For the full episode, tune in here: Episode 300 | The Unfair Advantage: Master This New Framework To Get The Passive Income You Want – Chat with Jaemin Frazer 

__________________

Inspired by Jaemin Frazer’s Insights & Ready to Start Living Your Best Life?

When it comes to finances and money management, it’s easy to bury your head in the sand—but consider this your wake-up call. 🚨 

Even if you’ve got your finances under control, our free e-book, Make Money Simple Again, offers fresh insights and frameworks to keep you ahead of the game. 

Or explore our money management app, Moorr—designed to help you fine-tune your strategy and create the lifestyle you want, on your terms. 

If You Enjoyed TPC Gold | How to Beat Insecurity: 4 Tips from Life Coach Jaemin Frazer, You Might Also Like:

Transcript

Bryce Holdaway
Hey, your latest book is Unhindered and you talk about the seven practices. Can we just, can we summarise what those seven practices are?  

Jaemin Frazer
Yeah, so practice one is to step into the light, which is a big part of this conversation. A lot of people are afraid of the light, for what the light will reveal. So they run and they hide and they avoid. However, if you’re going to begin any change process, you’ve got to see clearly what it is that you’re dealing with. So the only people who ever solved insecurity were the ones that were willing to stop running and do an honest assessment of their current reality and to do an accurate diagnosis of what the problem really is.  

Typically people try and solve the problems where they see the pain. So they see the pain with their job or their finances or their house and so they think it’s a money problem or a relationship problem or a work problem. They try and solve it on that level but when you turn the light on and say no, no, it’s a problem with your own opinion of yourself as we’ve talked about, then you’re into the process. You can’t change it if you can’t see it. So to see is the first practice. So that’s practice one to step into the light.  

So practice two, then the logical question people ask when they go, oh cool. So it’s an insecurity problem. Look at that. I thought it was a relationship problem. I thought it was a money problem. I thought it was a work problem. Look at that. It’s an insecurity problem. It’s very vulnerable, but I kind of get it. It’s true. The next logical question people ask is, well, why would I have that problem? Why would I have these opinions about myself? And typically they go back to the things that were said and done to them or not said and not done, the moments of pain and discouragement and disappointment and failure throughout their childhood or growing up. And they go, that makes sense. Yeah, I’m insecure because my parents were divorced or, you know, I got bullied at school or this girl rejected me, or my first business failed. That’s why.  

But that’s not why. That’s got nothing to do with why you’re insecure. We’re sense-making creatures, we’re storytellers. We go into the world and we tell stories about our experience. We have to make sense of it. And we make sense of it with two questions. Why did this happen? Question one. Question two: What does it mean about me? So we’re asking and answering those questions in moments of pain as children, and answering questions as children do with a limited amount of data and maturity. So the pattern is children answer those questions negatively.  

So in moments of pain, why did this happen? I must have attracted it, deserved it, brought it on. If I was better, this wouldn’t have happened. What does it mean about me? There’s something bad, something deficient, there’s something inadequate. So therefore, insecurity is created by us. We’re the one with the pen and paper. We’re not the actor in the story, we’re the storyteller. So practice two then is to take 100% responsibility. And not just to take 100% responsibility, but to realize you already are 100% responsible. You created this, it was you, you’re the one writing stories.  

So great, stop looking for other people to come fix this for you. Because lots of people do that. They think I’m insecure because my dad didn’t love me. Therefore I need someone else to love me better than my dad to fix this. No, no, you’re not insecure because your dad didn’t love you. When you perceived your dad didn’t love you, you decided the reason that was true was because you weren’t worthy of his love. Your opinion. So that’s responsibility. You’re the one who can change this. All change comes from responsibility, even though blame and excuses are natural and easy.  

Bryce Holdaway
Sounds easy, those two, right? Like sure, you know, step into the light, take responsibility. How hard can this be? I mean, to downplay that is to just downplay humanity, really. That is number two, it’s huge.  

Jaemin Frazer
They are huge, but people complaining that it’s hard. I’m like, it is hard. Great. What did you expect? And by the way, tell me your current existence isn’t hard. Tell me living as an adult who has outsourced their significance to the world. Tell me that’s not hard. Tell me that’s all beer and skittles. Of course that’s hard. Both roads are hard. That’s a given. You may as well choose the hard road that’s going to lead to life, rather than the hard road that’s going to keep you stuck.  

Bryce Holdaway
Yeah. 

Jaemin Frazer
You’re right. They’re hard. Practice three then is to stack the pain. So the only people who’ve ever solved this problem have been the people who’ve done so from a place of great pain. Which doesn’t sound fun, more hard stuff. But this is the gift pain offers. Pain’s intention is to move us from safety, from danger to safety. So you put your hand on the fire, it’s supposed to hurt. That’s pain saying, make some change with the position of your hand so you don’t destroy it. That’s very useful.  

So you know, feeling shit about yourself is supposed to feel shit. That’s the point. And that pain is designed to say, hey, listen, what if we did some work on your opinion so that you didn’t feel like this anymore? That’s a loving message to listen to. So most people are avoiding pain, masking pain, medicating pain, and therefore missing a massive opportunity for self-motivation for change. So stacking the pain means to stop and do an accurate cost assessment and go: How is this opinion of myself that’s gone unchecked for 20, 30, 40 years, how is this ruining my life? How is being a child in an adult’s world costing me in my job, my relationships, my career? Oh my goodness, it’s costing me everything. This is a disaster.   

So just because something’s killing you doesn’t mean you have to pay attention to that, which we see with smoking cigarettes as a great example. You kind of think it would be impossible to smoke cigarettes in today’s world because we know so much about it. But plenty do and they do so just by ignoring the costs. Easy. So you can ignore the cost of insecurity till you die. However, if you want to change it, then start by paying attention to the costs and it dramatically increases the pain just to go, this is a train wreck. And therefore you create this threshold moment where you kind of go, yeah, there’s pain in change, but there’s far more pain in staying the same.  

Bryce Holdaway
Yeah. 

Jaemin Frazer
Then you’ve got every cell inside you actively leading you to go whatever it takes, whatever the cost, whatever is involved, I’m gonna do this change work now before it gets any worse.  

Bryce Holdaway
You’ve got a window of time when you think there’s a sweet spot, isn’t it, from where people have got enough experience. It’s available to anyone, but you’ve got a sweet spot that you talk about.  

Jaemin Frazer
I think, yeah, I think the midlife 35 to 45 change window really is, and part of the reason why it’s so conducive to change is because the pain levels are right. I’m not sure that young people have enough pain to desire lasting personal change and perhaps elderly people have too much pain or pain that they’ve suppressed too deeply. But midlife, there’s a bunch of pain, but it’s kind of mixed with hope that you realize it’s not too late. I could make some significant change here and set myself up for an incredible back end. So it’s a beautiful resource, this pain midlife. And it creates this openness to go, what am I wrong about? What have I missed? What input could I receive now that I’ve been closed to before? So stack the pain.  

Bryce Holdaway
Stack the pain. So step number one is step into the light. Number two is take 100% responsibility. Number three is stack the pain. Number four is?  

Jaemin Frazer
Develop a compelling life vision. Often people just use pain avoidance as their whole motivation strategy. Anthony Robbins taught me this that it’s like the pressure cooker because massive pain leads to massive action. Sorry, massive pain leads to massive motivation. Massive motivation leads to massive action. Massive action leads to massive change. Massive change leads to massive pleasure, which dials down the motivation, which dials down the action. And then six months later, you’re back to where you were. It’s how people do weight loss a lot of the time.  

So it’s only half the equation. Sure, you got to have a moving away from strategy. Be clear about what you don’t want anymore. But what do you want instead? What’s the dream? Where are you taking this thing? What’s your vision for your life? Lots of people have already shut down that question, by the way. I think it’s the hardest question we get asked as adults, but it’s also the most beautiful, the most important, the most life-giving, and it’s always inside of us. To desire is human, so no matter how far you suppress it, we all do know what happiness and success is to us.  

So to tap into that dream again and to kind of realise that without a quest, without a mission, without a desire and ambition to actually do something meaningful. What’s the point of diving into fear and pain and doing some of this personal development work if you don’t have a reason? So the only people who solve this problem are the ones who dive back into that desire and reimagine a compelling future for themselves and kind of realize, I’m not prepared to die with the music inside me.  

One of my clients is an end-of-life pain specialist. And the reason he’s my client is because it’s his job to help people in great suffering at the end of their life. And he says, you might think it’s physical pain and suffering that is the biggest pain for them. It’s not. It’s always existential. It’s an unfulfilled life. It’s dying with the music inside you. It’s disappointment. It’s what if. It’s a should have, I would have, could have. He’s like, so many people are suffering greatly because they never found a way to fully show up as themselves. And he’s like, that would be me. If I don’t make some change now, that would be me too. So I think, again, we all kind of have this idea of something ambitious for our life. And to tap back into that is the only way you’re gonna solve this problem. 

517 | “Negative Gearing Needs to Go”: Have Bryce & Ben Changed Their Mind?

By in Podcast, Property Investment

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“Negative gearing is symptomatic of a dysfunctional & inequitable property market!” 🏚️💸  

Folks, this is a quote from Ash, one of today’s fantastic question ask-ers.  

And if you’re like us and have been fighting tooth and nail AGAINST abolishing Negative Gearing… 🥊✊ 

You can understand why Ben has described this question as one of the top 3 questions he’s ever been asked on the show!  

Tune in to hear Ben and Ash get into the great negative gearing debate and answer – should it be removed? If yes, what are the alternatives??  

Plus, we cover:  

🏆 We’re going against THE Noel Whittaker! Thoughts on knocking residential property and generational attitudes towards wealth-building. 

🏘️  Restrictions on lending: What are the 2 BIG questions to ask yourself regarding borrowing capacity?  

💰 We don’t vouch for most property owners having five properties. Here’s why.  

It’s an episode that covers the hottest topics at the moment; listen in now!  

Free Stuff  

  • One Spot Left in our 2024/25 Summer Series!
    Help us inspire others by coming onto the couch and sharing your journey towards financial peace! We’ve got one spot left, folks. Share your story here >>  
  • Graphs from Ben’s “What’s Making Property News”: Victoria rentals fast declining! Victoria Rental's Falling
  • Guests & Episodes Mentioned: 
  • Want Episode 515 slides + our 3-part Negative Gearing video series? Just fill out the form below, and we’ll send them straight to your inbox!

 

Questions We Answer

Q1) Thoughts on Noel Whittaker’s Path from Jye

Thoughts on Noel knocking property as an investment when that’s your whole philosophy? (and our whole retirement plan 😬)

Q2) Regulatory limitations for borrowing capacity assessment from Ash

Hi guys, love the show. Thanks for all of the great information and value you provide to the community.

My question is on dealing with regulatory limitations around income when being assessed by lenders for borrowing capacity. I currently own 4 investment properties, and I’m in the process of looking to purchase a 5th.

All of the existing properties have done well with appreciation since they were purchased, so I have about $200,000 of available equity. And the properties in the area that I’m looking at are around the $500,000 to $600,000 mark. So I’m theoretically well covered from a deposit perspective.

My employment income is around $220,000 a year gross. And the investment properties that I have, are returning between 7.0-8.0% yield, against their current value.

Other than the investment properties, I don’t have any additional lending or personal loans, and our primary place of residence is provided by my employer. So our family living expenses, for myself, my wife, and our 3 daughters, are relatively low and we have a reasonably well managed budget that we track.

However, when being assessed for my borrowing capacity by my lender for this next property, I was informed that the restrictions imposed following the royal commission, meant that the lender was only allowed to assess the investment properties as having a maximum of 6% yield each, which results in hundreds of dollars a week, not being able to be included within my available income.

That’s on top of the 3% buffer which is also applied to current interest rates for affordability assessment.

All this to say, that my borrowing capacity based on my “income” is well short of the available equity that I have, despite the fact that all of my existing properties are currently cashflow positive.

While I’m confident I’ll be able to arrange my finances to purchase this 5th property, I don’t see an obvious pathway for being able to purchase any more. Short of waiting for further significant increases in the property values and their assessed yields. If you’re able to offer any guidance as to the best way to navigate an imposed affordability constraint, that would be much appreciated

I’d also be really interested in your take on how some people seem to be able to purchase 30, 50, or 100 properties (if you believe the claims on their social media pages and book covers) without running into this constraint.

It would seem that even with cash flow-producing properties, they would surely be running into the same regulatory limitations on income assessment with the 6% yield limit.

Or is there a strategy that I’m completely missing?

Kind regards,
Ash

Q3) Why Australia loves and hates negative gearing from Jim 

Hi Ben and Bryce! 

I’m a big fan of your work and the podcast. Your focus on empowering the community with knowledge about the property industry and sound financial management skills is fantastic. 

Ben, a shout-out also to the very important work PIPA is doing—couldn’t agree more that the property investment industry needs regulation as soon as possible. So, on to my question (or rather, a topic I’d love to hear more about on an episode): negative gearing. 

As a property investor in Australia, I’m going to say something controversial – negative gearing needs to go. I believe it’s a counterproductive policy, but please hear me out, because there’s an important context to this that merits some discussion from experts like yourselves. 

As a starting point, no one should be investing in an asset that consistently costs them money, relying on PI tax offsets and the hope of a future capital gain that may never materialise. 

I’ve heard the justification that negative gearing is just like any other business where investors should be able to offset financing costs, but in my view this logic is flawed.

In a typical business, debt is used to acquire assets that generate positive cash flow and can be paid off. No business willingly takes on significant debt with the expectation of enduring ongoing cash flow losses in the hopes of one day realising a capital gain. 

If someone approached a stock portfolio this way, we’d call it speculative and reckless – so why should property investment be any different? 

Negative gearing is also a global outlier. In most (but admittedly not all) other countries, property investors do not expect or accept being cash flow negative. Yet in Australia, this has become normalised. 

Why? Because the cost of holding property – largely driven by taxes, rates, and other overheads – is extraordinarily high here. And this, in my view, is where the industry needs to be focusing more attention and policy thinking. 

That said, I agree with you that abolishing negative gearing in isolation would cause significant disruption in the already fragile rental market. 

If investors were to exit the market en masse, as many predict they would without negative gearing, the result would be catastrophic. Rental stock would shrink, and rents would surge even further. 

Therein lies the real dilemma: negative gearing has become an essential feature of Australian property investment precisely because of these inflated holding costs. 

You can’t get rid of one without addressing the other. The current structure of property taxation and regulation in Australia has made positive cash flow investment nearly impossible. 

Take the inability of landlords to pass on council rates to tenants, despite tenants being the direct beneficiaries of council services. This issue barely gets a mention – almost as if the industry is suffering from Stockholm Syndrome. 

Another significant factor is the imposition of extremely high state-level land taxes (especially for those investing through a trust). Again, hardly discussed, despite this tax being a major contributor to the unsustainable costs of holding property. 

Meanwhile, negative gearing in isolation is always front and centre in the debate. These issues together are ripe for reform. Unfortunately, state governments are drunk on land tax as a source of revenue and have little incentive to remove it. 

So if negative gearing is to be abolished (and I suspect it will eventually happen), the federal government must step in and reassert control over property taxation and regulation at a national level. 

Reducing holding costs would ease the financial strain on investors and make property investment more viable and cash-flow positive. 

In that scenario, negative gearing would become irrelevant, just as it is in most other countries. Some, including the Green Party, advocate for rent controls to mitigate the potential impact of constrained rental supply if negative gearing were scrapped. 

In other words, why bother addressing holding costs when you can abolish negative gearing and simply prevent landlords from raising rents? 

This might sound attractive to anyone currently locked-out of the property market by high housing costs, but this approach is really akin to trying to catch smoke with your hands and would be a disaster for renters. 

There’s clear evidence from cities like Berlin and Glasgow that rent controls only lead to higher rents at reset points and a tighter rental market overall. 

It would also be deeply unjust to impose such controls after decades of government policies encouraging and incentivising private property investment as the primary solution for rental housing, with governments effectively outsourcing and stepping away from that responsibility themselves.   

Negative gearing is symptomatic of a dysfunctional and inequitable property market. But advocating for its removal or retention without addressing the issue of holding costs is a bit like rearranging the deck chairs on the Titanic – it misses the bigger structural issues threatening the whole shebang. 

What’s needed is a comprehensive overhaul of the property tax system and a rebalancing of investor incentives to align the market with sound economic principles, which will help to protect rental availability and affordability. 

Isn’t this where the industry should be focusing the debate? I’d love to hear your thoughts on this, particularly if you think I’m off base.

 

Timestamps  

  • 0:00 – “Negative Gearing Needs to Go”: Have Bryce & Ben Changed Their Mind?   
  • 1:25 – Download our Negative Gearing video series slides & one spot left in the 2024/25 Summer Series!  
  • 5:22 – Mindset Minute: “This is how most people live their lives”  
  • 7:23 – Q1) Thoughts on Noel Whittaker’s Path from Jye   
  • 8:40 – Why Ben chooses residential property for building wealth 
  • 11:29 – Loss Aversion and how it links to the Pies losing the Grand Final 😉  
  • 12:42 – “There’s no single path to the holy grail.”  
  • 15:26 – Noel happens to live in a beautiful property in…  
  • 17:05 – Ben’s business analogy & Rupert Murdoch’s $150M property  
  • 19:59 – Q2) Regulatory limitations for borrowing capacity assessment from Ash 
  • 22:57 – Throttling investment properties? The answer in short is 100% yes 
  • 26:40 – The 2 big questions for Ash…  
  • 31:53 – Envy Sells: Be wary of these  
  • 33:38 – Folks, only 1% actually make it!  
  • 36:11 – Alternative strategies when regulation limits your borrowing capacity   
  • 38:19 – Q3) Why Australia loves and hates negative gearing from Jim   
  • 44:14 – The political system WON’T reboot the taxation system  
  • 46:09 – The Macro Story: Why are we seeing this?  
  • 49:01 – How it helps the lower-income earners   
  • 50:05 – Why it’s about finding a balance: From wage to workers 
  • 53:53 – “Most people are after power, not legacy.”  
  • 55:35 – What is the alternative to negative gearing? 

And… 

  • 57:14 – Lifehack: Ask for late check-outs from…caravan parks!? 🕰️ 
  • 1:02:04– WMPN: How many properties are available to rent in Victoria?  

 

TPC Gold | What Makes Vendors Sell Before Auction?

By in Podcast

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Ever wonder why a vendor would choose to sell before auction day? 🤔 

If you’re a buyer looking to understand the psychology behind pre-auction sales, today’s bonus episode is for you! 

From agent strategies designed to create urgency, to sentimental sellers seeking the comfort of a quick sale, this episode reveals it all.  

You’ll also get the scoop on how market conditions, interest rates, and emotions can tip the scales in your favour! 

For the full episode, tune in here: Episode 145 | 8 Reasons Why Vendors Sell Before Auction 

__________________

Buying Before Auction? We’ve Got You Covered!

We hope this snippet helps you strategise your pre-auction offer with confidence! 

But if the auction day showdown is unavoidable, why not bring in the experts? 

Experienced Buyers Agents from our sister company Empower Wealth can guide you through every step, helping you: 

✅ Save Time – We handle the research, inspections, and negotiations.
✅ Gain Market Insight – Get insider knowledge on property values and trends.
✅ Reduce Stress – We’ll bid on your behalf, so you don’t have to!
✅ Avoid Overpaying – Secure the best deal with expert negotiation strategies. 

Buyers Agents can take the pressure off, so you can focus on landing your dream property! 🏡 Book in a free initial consultation today >> 

 

If You Enjoyed TPC Gold | What Makes Vendors Sell Before Auction, You Might Also Like:

Transcript

Bryce Holdaway
Ben, we’ve got a framework. We’ve got a framework.  

Ben Kingsley
No, are we unpacking a framework today?  

Bryce Holdaway
We’re going to unpack a framework. Here’s the deal, right? The amount of times that someone comes up to me and says: Bryce, tell us a strategy about buying properties prior to auction. And so there’s a bit of a technique. And then they say to me: why would someone sell prior to auction? And I’ve given up trying to come up with all the answers that people do, because sometimes it’s just you know, circumstance. So we decided that we’d actually give a framework. 

Ben Kingsley
Brainstorm it, yeah, brainstorm it, throw a few ideas out.  

Bryce Holdaway
So we threw a few around.  

Ben Kingsley
So you want me to lead off?  

Bryce Holdaway
I do.  

Ben Kingsley
Mate, I’m gonna start with an actually marketing ploy.  

Bryce Holdaway
Ooh. 

Ben Kingsley
So this is a little bit different. I sort of look at it like this where I’m basically talking about if for whatever reason there’s a time issue, and we’ll talk some about some other time issues as well I reckon, but this one is about marketing. Okay, so auctions are about creating scarcity and creating an outcome by a set time in a competition sense. So I actually think that agents might say: look, let’s put this under, you know, forthcoming auction or auction set date by this or offers before. So all of a sudden it’s actually a means by which the vendor, and they might be traveling overseas, they might have other commitments, but that’s the sort of thing for me if it is a marketing ploy to basically create that interest and get a result sooner rather than later. So I’m saying the number one is because it is an agent-led ploy to get an outcome quickly.  

Bryce Holdaway
I like it. There’s actually an agent, can’t think of his or her name, I think it was a him, on the central coast of New South Wales has a market that’s around $400 to $450 as typical sale price. And that market’s not typically where you’d expect auctions. He goes to auction, I’m pretty sure it’s a he, he goes to auction on 95% of his listings, right? And in a market that’s not known for going to auctions. Because what it does is it actually timestamps the marketing campaign, which is what you’re talking about if the listener thinks the real estate agent only gets paid for their time. So if they have a private sale arrangement, that could go for eight weeks, it could go for 12 weeks, whereas an auction campaign has got usually a finite time.  

Ben Kingsley
Because we know, don’t we, that when a property’s been hanging on the market for a while: What’s wrong with it? If it stays on too long, and we know it happens in Queensland as well, doesn’t it?  

Bryce Holdaway
The power shifts, doesn’t it?  

Ben Kingsley
Yeah, yeah. 

Bryce Holdaway
To the buyer. But this particular agent uses that as a timeframe to create scarcity, to create urgency, so that they can get through all their campaigns. So I think you’re absolutely spot on. You gotta think about: it’s not just does the vendor wanna sell to me? It’s the agent whose got ambition and goals and they’re trying, because if they do private sales all year, their income will probably be a third of what they’ve done, because they’ve got these rolling campaigns. They get the deal done before the auction, but it creates the urgency in the time frame.  

Ben Kingsley
I love it, I love it. 

Bryce Holdaway
So I think opening with that one’s a good one.  

Ben Kingsley
What do you got?  

Bryce Holdaway
For me I’m gonna go, massively, telescope, big picture. Sort of the external micro factors. Think about talk of sentiment change, think about interest rates, think about government changing, think about last year when the negative gearing debate came up. All those things create anxiety and uncertainty in the mind of the vendor and so therefore if any of that exists, I think that’s often one of the reasons why a vendor would be keen to take an offer and accept any reasonable offer.  

Ben Kingsley
We’ve already seen the Sydney market come off and that is changing the sentiment in that market. I mean, we were there a couple of weeks ago and speaking to the people there, they all said, definitely, market’s definitely slowing. So if you are that, you’re sort of thinking, your macro might only be your state or your city, and you’re starting to think well, all right, just if, you know, a bird in the hand as opposed to potentially a couple in the bush, I’ll grab that offer. All led by that particular macro factors that is changing the view and the media, you know. All the sort of boom, bust types cycles we go through in the media, so I think that’s a cracker. Alright.  

Bryce Holdaway
Alright, got another one for me?  

Ben Kingsley
Well yeah, probably the nervous seller. I mean that’s a classic one where you know they’re not familiar with auctions, they don’t understand the process. They don’t want to go through this anxiety burn that’s going to happen when they’re on the day of the auction. You know and usually you know they may be an older vendor or deceased vendor, and they don’t have their partner there anymore with them to sort of give them the confidence and the security. And even though the agent is going to hopefully reinforce that, if they’re still a little bit sceptical about agents, that can certainly be a place in that. I reckon that’s the nervous seller, the one who’s willing to sort of say, all right, well again, if I’ve got a fair price and that’s all I was looking for, that’s gonna be enough to get me moving. I’ll probably move on the sale.  

Bryce Holdaway
Yeah, well, if you think about the auction process, as you know, Ben, the person who wants the auction is the agent. The buyer doesn’t want it. In fact, a lot of the time, the seller actually doesn’t want it because, like you say, it just gives them that internal churn and that internal burn. Yeah, often they get a little bit of stage fright. And the agent is so used to the auction process that it’s so desensitized to them that they will happily take them. They know it’s worth it get it out.  

Ben Kingsley
And it’s amazing to think that some vendors are just happy to get a fair price. I mean, the vast majority and the job of the selling agent is to get the best possible outcome. But in some cases, we’ve talked about this before, where a vendor has sold to the couple that they prefer better. That they’ve got a connection with and this is a beautiful family home and I want you to create your memories there. I don’t care if someone’s gonna offer me more, because we always naturally go to that position that everyone wants the most and if this thing’s gonna sell for $400,000 above reserve, I’m gonna be doing cartwheels because that sets me up financially. But there are some vendors out there who may be nervous and who are saying, you just get me that, because that’s all I need and the job’s done.  

Bryce Holdaway
I think you raised a really good point there because if you’ve got someone who’s got a family home. It’s been their family home for 30 years and they would just love to see another family get that property, versus a developer who’s hanging around at auction.  

Ben Kingsley
Yeah, that’s another reason. Yeah, could be sold before auction.  

Bryce Holdaway
You picked up on a very good point. So I’m nervous or a sentimental seller.  

Ben Kingsley
Yeah, sentimental seller.  

Bryce Holdaway
Yeah. All right. Okay. I reckon this one’s a bit of a no-brainer, but they’re committed elsewhere. 

Ben Kingsley
Forced sales.  

Bryce Holdaway
Whenever given the choice between certainty and uncertainty, they will take it every day of the week. And of course, if they then translate that uncertainty into certainty, they can then maybe line up settlement dates as well. So, you know the classic they’ve bought somewhere else, is one of the reasons that bird in the hand is worth two in the bush.  

Ben Kingsley
Yeah, yeah, and you know in a moving market a lot of people were forced to do that, you know. They were sort of saying I just need to get in and then I’m reasonably confident that my property will get a certain value. So if they’re upsizing, you know they were forced certainly in the Sydney market It’s happening a little bit in the Melbourne market as well as opposed to going the other way around, because we would always say if you’re a conservative person you should sell first and then buy. But if the market’s moving too quickly, you might just jump in. And so obviously, if they have done that and they haven’t sold their property, guess what? Again, a good strong offer early in the campaign could potentially get that property off the market. 

516 | The Alternatives to Abolishing Negative Gearing (LIVE)

By in Podcast, Property Investment

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Continuing our LIVE streak, we’re back this week to answer your burning questions on negative gearing and dive into our think tank to drum up EIGHT alternatives to abolishing it! 🔥

Whether you’re curious about how many Aussies are impacted by negative gearing or if it’s possible to get politicians to lift their eyes beyond an election cycle…  

We’re revealing our own list of realistic and actionable solutions to solve our housing crisis, increase density, reduce building costs and much more!  

Here’s what you can expect:  

  • How much tax is generated for the government by positively geared properties? 
  • Eight creative solutions to try BEFORE eliminating negative gearing 
  • How to reduce building costs with cutting-edge technology 
  • Realistic solutions to increase rental supply and affordability  
  • Future concepts to expand and maximise existing infrastructure from pay-to-play to selling airspace  
  • Why properties don’t just disappear! (Tune in to hear Ben forecast rental demand to use the next time you get into that kind of argument around the dinner table 😉) 

For a one-of-a-kind look into how to get more folks onto the property ladder and solve our growing housing crisis, tune in now!

Want last week’s slides + our 3-part Negative Gearing video series? Just fill out the form below, and we’ll send them straight to your inbox!

Free Stuff  

 

Questions We Answer

Q1) Is it a simple as that? From Andrew M

So if 71% (approx. from memory) only buy 1 property and then it quickly declines when you look at 2 and 3 etc. Why do we keep coming back to this argument…is it because it only affects a small amount of people but the rhetoric is good for votes…is it as simple as that?

Q2) How many Australians are affected by negative gearing? From Ashisain

At the end of the day, this is for politics…do we know how many people in Aus are affected by negative gearing? It can’t be substantial enough to affect election outcome.. (individual voters numbers)

Q3) The million-dollar question from Brett A

So the million dollar question is: How do you get politicians to lift their eyes beyond an election cycle?

Q4) How much tax is generated for the government by positively geared properties? From Tyrone P

We know how much negative gearing costs the govt in taxes but do we understand how much tax is generated for govt by positively geared properties? How would abolishing it affect that govt income?

Related graph:

Timestamps  

  • 0:00 – The Alternatives to Abolishing Negative Gearing (Part 2)  
  • 0:43 – Download the slides from Ep 515 | The Truth About Negative Gearing & Capital Gains Tax!  
  • 3:37 – Ep 515 Recap: Everyday Aussies will miss out  
  • 5:28 – Q1) Is it as simple as that?  
  • 8:16 – Who are the people investing in 1 or 2 properties?  
  • 9:53 – Negative gearing is a tax outcome  
  • 11:04 – Q2) How many Australians are affected by negative gearing? From Ashisain & Q3) The million-dollar question  
  • 11:42 – “Elections are all about looking in the margins”  
  • 12:12 – ATO: How many people have seats and are affected by negative gearing? 
  • 13:42 – How have we found ourselves here  
  • 15:05 – Q4) How much tax is generated for the government by positively geared properties?  
  • 16:28 – The net amount of property investors profiting and loss  
  • 20:39 – Think Tank: The alternatives to abolishing negative gearing  
  • 22:50 – The 1% Rezoning Rule  
  • 25:19 – Land Release Scheduling  
  • 27:18 – Higher Density Zoning  
  • 26:16 – Reduce State Gov Taxes & Charges 
  • 32:33 – Land Lease Communities  
  • 36:20 – Household Size Formation 
  • 38:12 – Accessing Super for a Deposit  
  • 40:29 – Reduced Build Costs  
  • 45:57 – Future Concepts: A pay-to-play fee  
  • 48:22 – Selling airspace to increase density  
  • 50:25 – Properties Don’t Disappear: Forecasting rental property demand 
  • 54:17 – Rental Supply & Affordability Ideas
  • 56:25 – Going for granny flats & tiny homes 
  • 57:109 – Ageing and Students: It’s not a room shortage, it’s a housing shortage!  
  • 1:00:27 – Encouraging Build-to-Rent 
  • 1:00:50 – Protecting the public and providing social housing  
  • 1:03:01 – Recap: Knowledge is empowering but ONLY if you act on it. 

 

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