[Podcast] Why so many Property Pessimists? | What you need to know about 6 new proposed taxes

Do you know that if Labor comes into power, they’re going to make us one of the highest-taxed countries in the world, and there are at least 6 taxes that could affect you.

Ken Raiss and I are going to discuss them on today’s show.

But first, I’m going to explain why there are so many property pessimists around predicting a property market crash.

You’ve seen the headlines predicting markets crashing and home values plummeting. Now listen in to find out what’s driving the negative news.

Property Pessimists

The property market is going to crash!

That’s the type of headline the media has been using to draw you in, isn’t it?

If they write something like “The long term property market fundamentals are sound,” it’s unlikely you would have bothered to click the link.

So, have you wondered why are there so many property pessimists when long term optimism is the most realistic stance?

The media loves to tell us that the property market will crash and gives plenty of air time to commentators with this view.

Now there’s nothing new about this.

In fact, part of this is natural — we’ve evolved to treat threats as more urgent than opportunities.

Warren Buffett wisely said: “In order to succeed, you must first survive.”

But all the pessimism about our property markets and the economy takes things to a different level.

I’ve found that if you say there’s going to be a property downturn and you’ll get retweeted.

If you say we’ll have a big downturn, the newspapers will quote you.

But if you say we’re nearing the next global financial crisis and that property values will fall 40 percent and you’ll get on television.

However, if you mention that good times are ahead, that certain property submarkets will finish the year higher than they started, or that our property markets are not going to crash, a common reaction from commentators and spectators alike is that you are either a salesman or you don’t understand the true risks.

Here are 3 thoughts about what’s going on here.

1. Money is universal

So, if something bad happens it tends to affect everyone, albeit in different ways.

That isn’t true of, say, the weather. A hurricane barreling down on far north Queensland poses no direct risk to 95% of Australians.

But a recession barreling down on the economy could impact every single person – including you, so you pay attention.

And of course, this also applies to the property market where around seventy percent of Australian households own or are paying off their home.

2. Pessimism requires action

Bad new means you may have to sell, or run away, or hide!

On the other hand, optimism is mostly a call to stay the course. It’s not nearly as urgent.

3. There’s a lot of money to be made in the property advice industry

Currently, there is no regulation of the property investment advice industry and while there are some very professional people and organisation around to help investors, because of the potentially large amounts of money involved the property advice industry has attracted an army of truth-benders promising the moon.

A big enough commission can convince even honest, law-abiding salespeople that the dud properties (we’re looking at you off the plan apartments and house and land packages) they are offering are in their customers’ best interests.

So they promote optimism with stories like properties never drop in value, or (all) properties double in value every ten years, or the tax depreciation and lack of maintenance of your new apartment make it a great investment. 

And over the years too many people have been bamboozled by these property spruikers version of optimism.

By the way…most promotions of optimism are realistic

But, of course, not all are.

Just so you understand what optimism is — real optimists don’t believe that everything will be great.

That’s complacency.

Optimism is a belief that the odds of a good outcome are in your favour over time, even when there will be setbacks along the way.

I’ve read that the simple idea that most people wake up in the morning trying to make things a little better and more productive than wake up looking to cause trouble is the foundation of optimism.

Now that’s not too complicated.

But it’s not guaranteed, either. It’s just the most reasonable bet for most people.

So, don’t become a property pessimist, despite what the media try to sell you.

Instead, become a property realist.

6 New taxes: The Labor Tax Grab

No one likes paying more tax.

With the odds shortening for a Labor government it’s important for real estate investors to understand how a Labor win could affect their property investments. 

Did you know you’ll have to pay up to 6 extra taxes if Labor comes to power?

If Bill Shorten becomes our next Prime Minister, millions of Australians will have to pay higher taxes. And he’s not just after “greedy property investors.”

If he has his way Australians will be amongst the highest taxed people in the world.

Here are some of the tax hikes the Labor Party is proposing

1. The top tax rate would rise to 49%
2. A higher tax on capital gains
3. Limiting Negative Gearing
4. Retiree tax
5. Taxing distributions from discretionary trusts
6. Superannuation changes

You can also watch Ken Raiss and Michael discuss this topic in the following video : Here's how a Labor win could affect your property investments

Links and Resources:

Michael Yardney

Metropole Property Strategists

Ken Raiss – Metropole Wealth Advisory

Some of our favourite quotes from the show:

”Currently, there is no regulation of the property investment advice industry, and that’s a bad thing.” –Michael Yardney

“I think what we’re saying is be aware of what could happen and see a good tax strategist who is going to be able to protect you.” – Michael Yardney

“If you can grow your wealth more effectively by legally paying less tax and using the system correctly, at the same time protecting your assets, it’s a great way of doing things.” – Michael Yardney