While the experts provide a technically sound breakdown, they are essentially documenting the clinical death of middle-class property leverage under the guise of policy reform. It is a professional roadmap for an era where only the most liquid players can afford to stay in the game.
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Budget Changes Explained 13 May 2026 Borrowing - Tax - MarketAdded:
All right, guys. Now we should be live across uh YouTube and Facebook. Simon Lou, Jeremy and Azelli, Morgan Bushell.
It's time to talk budgets. There's been some very big changes that have happened in the last 24 hours. CGT changes, negative gearing changes. Some of them are potentially not even going to fully take effect the way that everyone's already been talking around the water cooler. Jeremy, you and I were just talking about this beforehand. There's going to be some big borrowing changes as well. Morgan, you and I were talking like late last night. And Simon, you and I were chatting a little bit more about what potential effects this is going to have on the market. Now, we've got so many questions that you guys have already sent in. ready to fire at Morgan, Jeremy, and Simon. We literally had hundreds. So, some of them we had to kind of smoosh down together, otherwise we'd probably be here till next year's budget as well, still answering questions. But then we've also got a few as well that are going to come through from the live stream. So, whether you're watching on Facebook, whether you're watching on YouTube, if you've got a question, we can uh chuck it on here and ask straight away. Get as interactive as possible. The only silly one is the one that you want to ask and you don't. But otherwise, gentlemen, welcome. Welcome Morgan, Jeremy, and Simon. How you guys going?
>> Good, mate. How are you?
>> Um, >> are you typing your response there or over it to be honest, man? It's just been I mean, we've been talking about >> budget.
not this one, but we've been honestly this whole budget thing has been on the cards for um weeks and you know like it's there's been leaks every other day about what's going to happen and changes and this and that and obviously the big thing dropped yesterday. Really no surprises if I'm honest.
>> You know, we kind of expect it. The only surprise I would say is the whole negative gearing still applies until July 2021 uh sorry 2027 which I think is going to um incentivize a lot of short-term flippers.
>> So is that you mean the the CGT side of things Simon that's still going through 2027?
>> Uh that and also negative gearing. So, I think uh you know, the first thing that I thought of is a lot of people are going to be looking for opportunities now to try and flip before uh July 1, 2027. They might run up some costs, maybe stick a tenant in, you know, so that the rens >> uh or the renos or whatever cost they have accured over this period is going to be um be be offset against tax. But anyway, aside from that, I think it's just been a bit of a um yeah, I think I don't think there was any surprises um if I'm honest. Um and then this entire day, all day, I've just been flooded with investors. What's going on? Should I still buy? Blah blah blah. So, yeah.
Interesting.
>> And and this is going to be phone calls, I think, and text messages and emails that all of you guys are going to be fielding uh probably every day for a little while now. Uh, and we're going to go into this in about a 5 10 minute segment from from Morgan from more of a borrowing perspective, Jeremy from more of a taxation and structure, and then Simon from more of a market perspective, and then we'll jump into the the Q&A just as everyone sort of coming in. But otherwise, before we get into each of you guys, anything else that Morgan or Jeremy you guys wanted to sort of set the stage with or any anecdotes from today that you wanted to share, mate?
>> Um, not necessarily from myself. I mean, yeah, like I've I've like the other guys, I've had lots of inquiries about what the right way is to go ahead, what the impact is. So, yeah, it's and at least, yeah, I'm not going to spoil it too much with what you're maybe going to ask later, but yeah, it's just like Simon said, we kind of knew what was coming, so there's no big surprises.
It's just Yeah, it's I guess we just have to adjust to, right?
>> Yeah. I think that's that's the big thing. It's it's about I guess it is what it is to a certain extent. Now, how do we best play the hand that they've dealt? But by the sounds of what you were saying a little bit earlier, Jeremy, some of the cards might actually change and we not might not actually be playing the exact hand that we think we are because this still has to actually pass the Senate. Is that right?
>> Yeah. So, this is definitely a budget without throwing, you know, any party under the bus. I've got my own opinions which I'll keep to myself, but it is a cut your nose to spite your face type of budget. I think they'll struggle to get the intended effect on who they wanted that to affect. You know, they're after that top 1 to 5%. Uh but they're actually going to wash up probably the 85% of people that need a lot of these policies to grow the wealth. And we've also got to understand as well that this this CGT change doesn't just impact property. It impacts all investments from shares, cryptocurrency to gold and super bullion and all the other things.
So I I stress to everybody and I've stressed to nearly the 300 emails I've received today and 90 phone calls since 6:00 this morning that the devil will be in the details. What they've given us is a budget which has a lot of fluff in it.
Um in the back end then it starts to be put into proper legislation which they present to the floor of the lower house and then it moves forward to the upper house. Couple things I was surprised to hear that I thought Greens would be supporting this like heaven and high water, but it not doesn't seem to be the case. There's some things they support and there's a lot of things they don't.
So, they'll get through.
>> Just to quickly jump in there, Jeremy, what's one of the things they're not supporting? Because I I would have assumed the same thing.
>> Yeah, capital gain tax. They love the negative gearing. They've been pushing on about, you know, taking away negative gearing because it's what it's disproportionate in the sense that when you are negatively geared and you're in a 47% tax bracket for every dollar you're negatively geared, you get 47% back. And if you're a 32% tax bracket for every dollar of negative gearing on that same property, for instance, you're only getting 32 cents back. So understand where they're coming from about the disproportionate tax system, but taxes are disproportionate based on the income we earn. people are still spending the same amount of time. So, the argument doesn't go both ways that the Greens have. However, it was it was it was interesting to see the the lack of support they had for capital gain tax because one of the reasons why Peter Castello and John Howard removed the indexation method in 99 was because it was was sucking out and reducing productivity. There was no investment happening during the 90s. You didn't have, you know, properties transacting like they were today. you didn't have investment into new businesses because if it did shoot up quite a bit, you were going to get stung with hell of a lot of tax when you take into account the indexation method. So, it it was taken away to give a lot of productivity to bring back investment into the Australian economy to get the Australian people excited about investing again.
And it had its intended effect when it was removed. We've gone through the last 26 years with probably the most prosperity out of any country in the world when it comes to living standards and people. So, it was interesting to see while they spoke about all this, I was more interested to see how they were going to frame it. And in in my personal opinion, I think there's going to be a lot of uh there's going to be a lot of push back, especially from my industry when you get the big guys involved that actually know what tax legislation is and how to interpret correctly. I think that's where the needle and the penny is going to drop for the government and there'll be amendments. Don't estimate amendments happen to budget proposals.
The division 296 was proposed in one way. It was amended, reshaped. It didn't pass the upper house and then eventually got through with a lot of compromise.
So, we might still see a lot of compromise to happen um in this federal budget.
>> And Jeremy, we may as well open up um with yourself first, mate. One question that I actually wanted to ask you was around the the carried forward losses. I was actually just reading uh this before. Uh from July the 1st, 2027, losses related to an existing residential investment property purchase uh from 7:30 p.m. Australian Standard Time will only be deductible against other income for residential properties, including capital gains. However, when an investor has excess losses, they will be able to carry forward that excess to offset residential property income in future years, enabling losses to be carried forward uh ensuring investors remain able to claim deductions in the future and costs of maintenance. So, does this basically mean negative gearing isn't gone, it's just been changed around and kind of moved forward. I it it's the concept has changed how negative gear in work. So again when you had losses that arose from a property you could claim that as a deduction against your employment income your work rellated income your salaries and wage. What they've done is they've segmented the return to say your income and your expenses for work is how you get your refund and know interest and dividends and all that stuff. But your property side of things, that's a separate portion within the return. And you'll only be able to claim negative gearing against future related property profits that you make. And if you don't have enough property profits and you might have excess losses because you sold a property and you made a loss, maybe capital loss that is, you can utilize that against the next property you purchase and maybe the passive income that it generates. So they're really segmenting just the property section with inside the return and almost almost isolating it like it's own little business so you don't get benefit and that whole purpose of what they're trying to achieve Todd and and for all the listeners is they're creating a brand new floor rate and that floor rate of tax is 30%. They don't want anyone to access any better tax rate than 30% from your investment related profits essentially. And that's that's a little bit of a bee in my bonnet as accountant because the way I would work is I would factor in the tax rate of zero all the way to 47%. And it was up to me to minimize my client's tax to bring it as close as I can to zero. Now that zero starts at 30. So effectively speaking they're saying that 30% now is your is your best case scenario. and my my tax rates to play with now sits between 30 to 47 as opposed to 0 to 47. So they're really limiting. There's still a lot of tax we can save for clients because there is a lot of movement between that 30 to 47% mark, but there was a hell of a lot more benefit between 0 to 47.
>> Um so that's going to be the the major thing that I you know want to share with people and and explain to people as an accountant. the best I can get now, best we can get is 30%. It's potentially no longer zero, >> mate. And that's obviously going to change our borrowing power in uh well, I'm not going to say a big way yet, but Morgan, you're going to give us more detail on that in just a moment. But uh Jeremy, what are the other big takeaways that everyone really needs to understand as a property investor from both a either taxation or structuring point of view?
>> So, first couple things, let's go through the the top level points. So negative gearing on established residential property is effectively gone now for new buyers post the budget. For all of us who hold properties prior to the budget, we still have the ability to continue on as normal from a negative gearing perspective. It's just any future properties we purchase. Those will be trapped as losses and later utilized against income that we generate from properties or potential capital gains. And that's effective pretty much for any property with a date of contract after 7:30 p.m. on the 12th of May. Um, for new properties, you will still have the ability to claim negative gearing.
The definition of new property, I thought you could knock it down, build a brand new one, and you got a new property. That may not be the case. You have to actually create actually have to create more dwellings. So, knocking down a home and building two, for instance, town houses, apartments, all those other things. So, that's something to consider what a new home is. Also, if you buy a home from a builder, has to happen within the space of about one year of completion for it to still be deemed as brand new. Um, so that's something to consider and depreciation rules will all stay the same for new properties. You also get the benefit of being able to choose both methods, which is the capital gain discount if you sell that new property in the future or the indexation method. Now, for everybody out there that what's the difference between the two and we spoke spoken briefly about it, but for long-term investing, I mean for low growth long-term, you'll often find the indexation might be better off to calculate what they call the real gain.
But if you've got very short-term growth and you want to exit it, you are going to pay a truckload of tax. And this is one of the best ways I can explain it.
And I'll use shares as an example because the numbers are smaller to understand. But if you buy a share um on the 13th of May under the new CGT rules for $100, you hold that share for 13 months and sell it for $200. If the CPI, which is how the indexation method is calculated, is 4% roughly. Um, at the end of that 13 months, the cost base of your shares is now $14.
Now you've sold it for $200 less your index cost base of 104. You now have to pay tax at your marginal rate on $96.
Compared to the 50% CGT discount method where when you had that share bought sold for 200 and bought for 100, that $100 gain would obtain a 50% discount.
So 50 bucks goes in your back pocket.
and the other $50 goes into your tax return as taxable income. So that's the difference. The difference now on that example is $96 which you pay tax on at your marginal rate versus $50 which you pay tax on at your marginal rate. So effectively under my example um and it's not that exaggerated. These things do happen effect you might be paying double the tax that you would have under the 50% discount method. So there's a huge grab there, a significant grab there from the government for capital gain tax. And that's why I've been talking for the last month about the government creating a windfall tax system because it doesn't feel as bad, I suppose, mentally or from a psyche perspective that you're giving the government a bit of extra money after you've received this lump sum of cash.
>> So there a couple things to to think about. One of the big ones, it sounds like the pre985 assets lose their CGT exemption. essentially they'll have evaluation being done as at the 1st of July to create that new cost basing for the indexing method. So that's huge for a lot of people that have properties that they've purchased before uh 1985 that's I think the month of September.
Uh for any property for any property investor that has existing properties that valuation point in time as of 1 July 2007 becomes very important as well. I'll I'll slow this one down because it's a lot to digest. If you sell the property before uh 1 July 2027, you'll still be able to obtain a 50% CGT discount method. So that's brilliant.
>> But if you sell the property after 1 July 2027, two calculations happen. So you've got a calculation at a 50% CGT discount up to the value of the property as at 1 July 2027.
And then do you just basically get like a retrospective approval if you were to sell it in three years time that kind of not retrospective approval retrospective valuation or how they >> calculating you can you can get a retrospective valuation being done it must be done by a registered property valuer it can't be done by a real estate agent that's a market appraisal so effectively the two calculations are the 50% CGT discount based upon the normal method of tax that we calculate up to the valuation price on the 1 July 2027 date and Then any time thereafter once you've created the valuation cost base index is now under the indexation method for CGT. So there's two calculations now that accountants have to do if people decide to sell their properties after 1 July 2027. So it's a form of grandfathering for everyone that's listening. It's a form of grandfathering but not traditional grandfathering.
>> So very kind of split >> So it's kind of split grandfathering almost.
>> Correct. Correct. Yeah, >> one of the big ones that blindsided me, and I still don't know how they're going to write this into legislation. So, I'm very interested to see what they do, that trusts now will face a 30% tax as a minimum on distribution. So, that that to me is very very interesting how they're going to ride it. that goes against, you know, history, historical uh ways of tax minimization through the use of trust and the ability to distribute to the beneficiaries and utilize marginal tax rates from different people. But for them to create a flaw of 30% tax on the distribution, that to me is a huge negative because if you have a income that you've generated from that trust from passive income the property provides or from a capital gain for argument sake and you were to distribute to that to that money to your spouse where their income would have been zero and normally you would distribute 20 grand to them and that's a great way you can get 20 grand taxfree from your investment. Now, under the new legislation that they proposed last night, it will face a tax of 30%. Which in this particular case on that 20 grand now that you distribute to your spouse where you thought you'd pay no tax, you are now paying 6,000.
So, that's a massive and significant change in in historical tax legislation around trusts. It's literally rewriting the playbook on it. Um, and speaking to people that are been in the industry for nearly 60 years, they they don't even know how it's going to be written because there's things to consider like how they're going to, you know, factor in that 30% whether it's imputation credit effectively if it flows through to the individual or not and the individual gets a credit or an offset for it. So, that's a really big one.
>> And this is something that I I know we're going to open up in a lot more detail as well because we've got tons of questions around structure for yourself as well. How this is going to be different. Is it still any any good to even buy in your personal name? Uh but but if we can open that up in a little bit more detail in a minute, mate. And Simon, I do really want to get your thoughts on this shortly as well around if there's going to be this 12 month window around people being able to still get the CGT discount. Are we potentially going to see this mass selloff? But before we jump into that, Simon, do you mind Morgan if we actually jump into a little bit of what you've been modeling out from a borrowing power perspective?
Because I think this is the thing that's on everyone's lips because already from the past what is it four or five months the start of the year the average Australian household I think has already had their borrowing power stripped by around sort of 70 $75,000.
Now if we can't claim back negative gearing benefits I know you've been playing with a whole lot of different modeling today. Do you mind opening up a bit of this and basically shedding some light on what our options are m >> Yeah sure. So I mean for the people that are listening so this is something I suppose that I kind of do for clients of mine where we'll show them a what I call a property road map and basically it will show them how far their borrowing capacity goes on paper when we look at positioning their uh borrowing power and income with different banks to ultimately show a bit of a road map um when it comes to building out a portfolio >> and yeah with what I'm about to show this I guess really shows when if a couple who I've kind of made up a bit of a scenario to demonstrate this, but when a couple decide to go from like going down the journey of really just maxing out borrowing power versus no negative gearing benefits, what that actually looks like. So, just bear with me a sec.
I'll just get my screen sorted and then we'll get going. But, um, >> and we keep cutting back to a shot of me. I'm not sure what's going on there.
Jen, if that's you, just in case. I think people want to see Morgan right now, not me. But and and if you've got got a screen share, mate, then yeah, I'll I'll pop that up in just two sec.
>> Okay, awesome. I'll get it going. So, just checking. Can you guys see that?
All right.
>> Uh, not just yet. Give me two sec. Here we go. Add it in. Done, mate.
>> Okay, cool. So, um, I need to do a bit of explaining about this so people understand. So, like I mentioned, this is something that I do offer to clients as a service of mine. And when it came to mapping this out, I based this on a couple that were earning just shy of about a collective 200k income, no kids, >> they've got their own home with a very small mortgage on it. And really, the goal was to just show them with a bit of savings in the mix to see how far their borrowing power would go. And to a degree, I've tried to keep this as realistic based on purchase prices we typically see in this market today. Um, so for this couple, for example, we actually kind of went ahead and assume they're going to buy their first two properties with about a 10% deposit. So 600, 650, and that's pretty much as far as they can go with major banks. So lending with three banks on that sort of income, no kids. And keeping in mind by the way this is built on quite a few assumptions. So in order to really present a fair and comparable comparison between both we had to hold a few things constant.
>> So >> what were those things?
>> Yeah. So I've got it over here. But it's really all lending except the home loan debt been on five years interest only.
>> Um all of the gross rental yields on each property they buy. I've kept it at about a 4% gross rental yield.
I mean, I don't know how hard or relaxed these people would go about going it, but I've really just kept everything constant, like income, rent, everything else the same. And I guess I've also held bank policies and rates the same across all of these banks.
>> Yep.
>> So, yeah. Sorry, you going to say something, Todd?
>> No, I was just going to say, so obviously this is going to change a little bit if rates change, but again, rates are always kind of changing.
They're never a static sort of percentage that we're working with. But already man, this is looking better than I thought. I was expecting much much worse. But I'll I'll let you keep going.
I'm packing the details.
>> Yeah, for sure. And I mean, like like I kind of mentioned too to make this as fair and comp like comparable as possible. We haven't actually modeled in equity releases to fund the growth of this. Um once we kind of add that into the mix, it does make it quite hard to compare both scenarios. Obviously, that's what we would do as we go down our journey. But for the sake of it, like you would get to two investment properties at this sort of level before you then drop down to second tier banks.
>> And the the key here is then being able to buy I guess another three with what I would call third tier lenders. So that's I suppose the negative gearing one where we can claim all of the negative gearing on each investment property.
>> Mh. The interesting part though is when we kind of flip the switch and pretend that there's no negative gearing. And that's where >> I feel like I spoke too soon then. Okay.
I thought that's what you were showing me.
>> Yeah. This is with negative gear.
>> Yeah.
>> If we remove negative gearing and this couple started their journey, they would actually be able to go and get five properties. So five plus the home. Um it's actually not as bad.
But the thing that's quite interesting about this is IP 1 and two are literally the same. It does not change.
>> However, for IP3, we actually have to use a more relaxed second tier lender before we then drop down to IP 4 and five. So there's one less property on screen. However, we're kind of going towards the bottom end of third tier lending. So, Liberty, like they've got their place in the market, but their their cash flow and their rates is going to not be nearly as favorable as MA money and or financial.
And that's the key difference between both. If they were to start their journey with just being in their home and then saying, "Hey, like we want to invest. We'll use some cash to buy these two and then keep going." That's the key difference.
>> Okay? So, this this isn't good news.
this isn't helping us borrow more, but this isn't potentially the news that is portfolio killer that that some people are expecting. So, we're basically looking at this from a it was going to be six and again this scenario with these specific situations, everyone's scenario scenario is going to be slightly different, but it's basically gone from six to five.
>> So, can I just inject something? I just want to inject a question. Sorry. It's >> absolutely >> going going to Liberty that early which t which typically Morgan they'll have higher interest rates roughly. What's the difference compared to CBA on average? I won't hold you too.
>> You're probably looking at like high sevens or low eights with Liberty. So >> So one 150 basis points difference give or take >> pretty much. Yeah. So, like if you go into that level, that's where I'd be saying, "Hey, we need to have a plan to leave this bank because we don't want to stay there forever.
>> Maybe I'll be asking things about their future." Like, "Hey, are you going to have a salary increase or a bonus or if you're self-employed, what does your next year look like? Can we leave these banks to ultimately improve the cash flow of that property?" because then it becomes more of a focus on opportunity cost instead of like just going ham and not caring about the repercussions >> because that would to me would be one of the questions clients would raise with me. Hey, going through to these very third aggressive tier lenders early, which I've used in the past. So, they're great. Get you to where you need to be.
You love them, you leave them. But if you're stuck there, you are ultimately going to pay a significant level of cost higher to higher compared to being with a mainstream lender.
>> And there without that negative gearing benefit potentially to be able to give you some reprieve, that's where it might be a tricky thing where you can get there, but can you actually hold it there? And that's where you don't want to have a pull and change to your job.
>> This is this is where I'm also thinking that it's it's realistically the the landscape's going to change. Yield is going to be so much more important. It's always been important to balance yield in the capital growth side of things, but it's going to be even more now moving forward and looking at this still. So if you were to stick more so with like first year, so you got what is it two with com bankank and then resimeac and first mac. So basically we got more normal interest rates on PPR IP 1 2 and three but then four and five if you want to keep pushing it you've really got to have a plan around this deal because if you've got an interest rate in like 7.7 8% whatever it is it's higher you've got to have a plan to be able to really get out >> 100%. And yeah like that's where it could maybe be an opportunity cost play or you know maybe it's not. And so it's like that's where it's really important for us to I guess put that investor hat on and actually do the cash flow like can the portfolio sustain that and if it can't like how much of your after tax income can you put aside every month to cover that deficit and if it's a matter of waiting 6 12 months to then leave because maybe nothing on the horizon is going to change that you can implement then maybe there's something I can do in that time frame. So yeah, it just comes down to that. But if it's like the deal of a lifetime and you have to use a bank like that to get it done, cool. But then it comes back to how are we going to leave that bank?
>> Got it. And is there anything else that you wanted to open up on a lending side of things, Morgan? It's a big change before we move on to to Simon and his thoughts on the big changes around the market.
Um, I mean, look, we talked a lot about at this stage with like I suppose we haven't even brushed on using entities at this point. Um, and that's maybe something to unpack a little bit later, but I think at this point with what's what I modeled out like that's something that I've assumed banks are just going to completely scrap. We don't know what their position is on the negative gearing when they're going to implement it. So, >> I've obviously done my best to try and show something what it could look like.
We don't know. Like, they might, >> as you know, we've talked about include negative gearing on everything that people have already got. Um, and then maybe the rest might just kind of get looked at like most trust lending does.
Company lend.
>> At the end of the day, banks are in the business of lending us money. Like, the less they lend us, the like it's their it's kind of their bread and butter.
It's it's what they like to do. So the the more of it that we can borrow the the better it is for them as well. Uh but but mate I'm going to >> sorry >> sorry Jeremy you had something to say there mate.
>> Sorry to interrupt but the red tape involved now and and documentation and records becomes so important for people in Morgan's industry because you now need to make sure that you you know know when you bought the property. You need to advise the the mortgage broker of that because if you're assuming they're just going to know all this stuff, it's going to be really difficult, especially determining what's eligible for negative gearing and what's not. And that's going to be guided by the banks and how they change their borrowing capacity calculations.
>> So true. Yeah. Mortgage broking aggregators are going to have to, I suppose, update how or we are meant to update now, I suppose, when the property was purchased so we can figure out if there's negative gearing. So there's probably going to be some changes to standard operating procedure and yeah, I think that's really important cuz we'll obviously need to know that to present the most accurate position to banks going forward.
>> Beautiful. Simon, wanted to ask you a few questions, mate, around uh what your thoughts are, what's going to happen with the market potentially because potentially is the key word here >> as far as a potential selloff over the next 12 months, opportunities. Where do you want to start, mate?
>> Um, yeah. Look, I think at the end of the day, um, uh, I think this we're going to probably see some changes to what was announced. So, I don't want to make any predictions, per se, >> but as as I'm sure you know, I I haven't been a big fan of negative gearing, you know, ever since I started uh, investing in properties and buying properties, uh, whether it's for myself or for clients or whatever. Um, and I still maintain that. Um look it when I first started buying properties it was easy to get positive or neutral cash flow properties off the bat but over time as you know um uh property prices have increased and and uh and the the rents haven't caught up. You know from my perspective negative gearing has been a a necessary evil um to uh buy properties in areas that are uh more likely to grow. uh and I keep talking about major capital cities uh in areas where uh you know affordable housing uh still exists because ultimately that's where you know humans have to live right at the end of the day. M >> um and I think the winners um of this particular budget are some developers um anyone selling developer stock uh you know off the plan house and land packages where they get a massive uh incentive a massive bonus a massive commission structure. Um existing landlords uh people like myself uh who already have properties and have the grandfathering and so on. Uh but also the amount of rents that are going to be increased in the short term, you know, is not something that I'm like jumping up and down about because at the end of the day, you know, my tenants and tenants, you know, across the board are going to be impacted the most. Um but, you know, it's going to be it's going to be uh a um uh inevitable, you know, at the end of the day. Um new investors a little bit.
>> Sorry. So, I'm going to jump in. Can you just talk in a little bit more about uh the details around why you think rents are going to to increase, mate? Cuz I'm sure that's something that everyone's kind of lent forward a little bit on.
>> Well, rents will go up because investors just won't sell, you know, or are less incentivized to sell. Um investors uh will also be uh new investors will also be well at least I guess the herd investors will be reluctant to buy which will make um less stock available you know. So in, you know, very high rental demand, affordable housing areas, there's just going to be more rental pressure. There's going to be less supply available. Uh landlords as well, you know, look, collectively, I think if you if you take away negative gearing benefits, uh especially for some of the newer landlords that have purchased in the past five or so years, um you know, the like they're just going to pass the the the expenses on to the tenant or as much as possible, right? And the underlying problem is still not addressed. Huge housing shortage, right?
We we don't have enough houses. We've got more people pouring into this country. And a lot of pe a lot of comments, you know, I'm reading are saying, "Oh, you know, just because landlords increase rent, it doesn't mean tenants are going to pay for it." Well, they are because for every house available, there's, you know, dozen dozens, if not hundreds of of of of people needing that property to uh to live in, you know. So ultimately it's just going to keep going up to the point where it just becomes right at the edge of affordability. Um so yeah I think look at the end of the day the people that the government was trying to help so renters and first-time home buyers I think they're the ones that are going to lose. They're the ones that are going to culpit the most. Um you know in my world you know the pro the world of buyers agents and property experts and and so on. I think it's really going to shake up the industry uh quite a lot in the sense that you know I think we we talked about this briefly uh prior to us going live. It's really got to separate the the the men from the boys I think. Um because you know a lot of people have been you know as you know been spooking regional areas uh regional markets and so on. That's going to be super risky uh moving forward uh because a lot of those in all those areas have been reliant on mostly uh investor activity. Um and ultimately areas where it this is going to flourish or the result of this is going to flourish is is still these major capital cities where you know at the end of the day people just have to go to people have to live in. There's no there's no there's no like um exception to that. You know people come to Sydney, Melbourne, Brisbane, Perth, all these big cities to live in because that's where all the jobs are.
>> Matt, and obviously this is opinion but people are wanting your opinion on this right now. So, if we're talking about the regional side of things potentially, what you you feel like it's going to take a hit if now, and I want to I want to preface this with if everything actually goes through the way that it's been told it will as of last night because we still don't know everything's actually going to get passed. Can you give us a little bit of a where do you actually see regional areas potentially going over the next kind of 6, 12, 24 months if everything does actually pass?
Well, I think there'll be an exodus of investors as much as possible. Um, and I think there'll be not enough buyers around. So, it'll be a bit of a race to the bottom. I think, you know, if a bunch of investors are panicked, if they're not getting uh the uh capital gains, if they're not getting the uh the amount of rent required uh to cover expenses, then people are just going to sell, but there's going to be no buyers.
So yeah, it's uh I mean I kind of talked about this ad nauseium prior to the budget as well and one of the reasons why we keep focusing on these big cities is for this particular reason right for for things like this to happen. One of the things we avoid negative one of the reasons why we avoid negative gearing is because um of things like this you know that can change at the drop of a hat. Um but uh but yeah I think there'll be an exodus. I think there will be a a large shift back to major capital cities especially as inflation rises and as sorry as interest rate rises as well because you know cost of living and so on people just aren't going to people are going to be a lot more realistic you know they're going to come back to big cities because that's where the jobs are that's where the infrastructure is that's where the their their sort of livelihoods that they've escaped from um uh uh you know to make the sea change or tree change uh are going to be you know not uh not optional basically Is anything else that anyone else wants to to add in on the market change potential? Jeremy or Morgan, before we start throwing to a few questions.
Anything you guys want to build on what Simon's just said?
>> You want to go first, Morgan? I've got opinions. if you want to go >> or I kind of want to mention something that I was speaking to Todd about off air actually because we were kind of like hypothesizing some ways that people could still you know use their existing properties to help them get tax benefits. Um, so maybe you can actually chime in on this a bit, but at least one thing we're talking about is people, I suppose, doing really large equity releases from existing properties to get some of those tax benefits, but then also then use that to buy property with more or less smaller loans.
And it's something that, you know, I've kind of been thinking about most of like today and yesterday because yeah, I think the people who could probably successfully do that and get the most out of that scenario would be the kind of people that most likely have a ton of equity and also a ton of borrowing power. But then is that the best way to approach investing? I'm not exactly sure. It's probably only applicable to like ultra high net worths or not, you know, your mom and dad's. I'm curious to know what you think though, Jeremy.
>> Uh challenge is is that you extract equity from a property, the deduction goes where where the equity went to from a purpose perspective. So a lot of people goes, "Well, I'm just going to go and extract equity out and I'll make it ultra negatively geared." Well, doesn't work that way. Where the equity goes to is where the interest is claimed. So that's a very important thing to note because they've got this very special concept with the ATO called part 4A, which is a tax avoidance rule. and they want to make sure people are doing things with inside the spirit of the law. Um, but the the strategies around that are as well, you might be buying properties in other entities. Your goal would be to pay off those properties in the other entities in the long term.
Work towards paying them down after all non-deductible debt is taken care of first and then you focus on those properties which are highly negatively geared potentially in your own name if they are in that particular case. So you your strategy now isn't just tax, but also what you do at certain points in time with your investment portfolio. And now no properties or no assets are created equal. You've got to really strategize what's more important in the portfolio and what do you focus on and attack first. Debt recycling Morgan, you and I have been a big fan of it. um that potentially may have its implications because a lot of people try to do it to obtain cash in the hand through, you know, lowering non-deductible debt, extracting the equity back out, pushing that towards a new property in the goal of getting some additional tax benefit back. I know a lot of high netw wealth individuals use that to buy high value properties. Uh that has its challenge now because you're not going to be getting your 47% back for properties purchased post 12th of May, 7:30m. So that throws a bit of a spanner in the works to a beautiful way of you know recycling your debt to gain some tax benefits from a market perspective.
I know just myself and and speaking to some people to get their concepts what we will see and I'll you know happy to be corrected as well anyone here but that top end of the market where land tax makes up 40% of the rental income and council rates and interest and you know these properties are 50 60 70 $100,000 negatively geared. you're going to you're going to see that top end of the market start to say, "Well, we're not going to buy that top end for investment anymore. We're going to start to come down to that middle end of the market because we've got cash to be able to maybe lower the debt or maybe potentially high yields and we probably will see more competition. So, more demand in that middle market, more demand in that affordable market, which goes to answer one of those questions I saw from MRI. How do you see the market in the short term under 650K?" I think that's going to have a lot more pressure. It's going to pump because that's typically where those yields are a little bit stronger and typically where you start to say, "Well, you know what? 10, 15 grand negatively geared that I can't claim as a tax benefit is a hell of a lot better than 100 grand."
>> Um, you know, I've got legacy clients.
I've genuinely got legacy clients that they've got properties where land tax is through the roof. They've owned it in their personal name for such a long time. they're going to start to question if it's worthwhile keeping it through that extreme amount of capital growth they've seen because they were they were getting that tax benefit cash-wise via the refund to help them hold that property long term. So, it'll be interesting to see that that convergence of markets um and what that does and how it creates additional demand especially in the more affordable area. And one of the main things I think we've all missed and the budget last night absolutely glossed over it because it's a main sticking point is we had 1 million migrants come in over the last four years.
>> Another 1 million migrants to come in over the next four years. So that's two million migrants to come in. We have just created and I know Todd I'm going to use your backyard for this but we've just created Adelaide if not potentially all of South Australia in the space of two years. and our infrastructure and our housing build program has not even kept up anywhere near to what's coming in. So that itself is going to put significant pressure on rental on housing market and there's only one place to go >> and my opinion government knows that and they're happy to get again a lot of that windfall that's going to come from it.
>> Morgan and I were talking about this just the other day when we were hanging out and there was like what was it again Morgan? Jalong uh with the projected population growth just for Jalong and then you look at the average people per dwelling it's like 2.5 and it was something like one person an hour on average is projected to move to Jalong over the next 10 years meaning that they need to build four houses every day just in Jalong to actually keep up with demand. I don't know the exact building rates but I'm pretty sure they're not building four houses every single day in Jalong. And like doubling down more to to your point, Jeremy, it's Yeah. And and if I can just actually ask it because I think the the chat that you and I were having and this is definitely not going to be applicable for everyone.
This is only going to be applicable for a few, but and I wanted probably more Morgan and Jeremy's opinion on this and we'll flick to the Q&A side of it. What I was talking about beforehand with um restructuring a bit more of that debt wasn't so much pulling out equity and putting it onto the other property because like Jeremy's saying, it's the intent of that where the tax deduction actually lies. was more so about actually unlocking a title. So, if you actually had, let's say, three investment properties and they're all worth, I don't know, 500,000 each, just to keep it easy numbers, and you had like 800 grandish debt over the entire portfolio, would you be better off then getting one that was like the the new one, unlocking that completely, restructuring, so then that would be freehold, and then if you had two previous ones that were bought before last night, basically maxing those LTVs out as much as possible to then hold that debt in a taxdeductible structure or or more not a structure a taxdeductible asset because of the date of purchase. Does that make sense?
And I'm getting you're already smiling at me, Jeremy. I don't know if I'm getting too creative or if this is just like Todd, you're swinging, man. But tell me >> out of the park on that one. Look, I I think I think people got to play it with a straight bat. Um and unfortunately 7:30 p.m. came across us. It's done.
There's not a huge amount we can do to change the past. it's more so actively looking towards the future. Um I I do see significant level of opportunities.
I've built my portfolio um in in off the back of significant events. One being the GFC, the next being the um banking role commission, the next being the co pandemic. This is one of those events that we will look back in five years time as Simon's mentioned a couple of times and this will be something that's a nothing. Um, and to be honest, in my opinion, I didn't want to get too political, but I will, a grenade that's been gift wrapped has been handed to the Liberal Party and One Nation. I just hope they don't trip over the carpet trying to get there. But if you take this type of policy to a next election, this, as I said, it's a cut your nose to spite your face scenario, and you will see a lot more people being impacted.
the ones they didn't want to impact, they're the ones that are going to feel the pinch um more so than the top 1% of investors who, let's face it, aren't using negative gearing as a as a strategy for most part.
>> Literally changes nothing for me.
>> Yes, they're hoarding profits and for many people it's it's business as usual in that top end they're aiming for.
I mean for a lot of people they aren't even negative geared you know like the house prices and and rent prices have gone up so much in the past three three to five years you know if you unless you bought in a terrible area I mean a lot of the houses that you bought 5 years ago will be neutral to positive already you know um and uh look uh the other thing is what's confusing for me is you know for some reason government thinks developers are not for profofit. You know, I mean, if I was a developer right now, I'd be rubbing my hands thinking about the price increases I'm going to pass on to the buyers using this massive carrot I can now dangle in front of, you know, unsuspecting moms and dads, >> you know, and you're you're going to get you're going to overpay even further.
And you know, we talked about this a lot as well, Todd, in previous podcasts, but so many people in Sydney bought off the plan units in Zetland, in Waterloo, in in Mascot, as an example. And during the massive boom phase that Sydney went through where properties doubled, some cases tripled in value, some of these investors or or or I I should say um victims of scams bought these units and that they were still in the red, you know, after all that time. So, I think a lot of people are going to be lured by these incentives uh of, you know, new builds and town houses and so on having all these benefits now and and they're going to they're going to overpay.
They're going to overpay and buy in areas as well. That's, you know, like where the demand for housing is just not there. rental ghettos. Rental ghettos, Simon, that's what I've heard a comment today is that there there'll be enclaves of just investors who bought there to get tax benefits and then the struggle will be is then how do they then sell it to the next person without the shiny object of negative gearing that they bought into.
>> So people be smart and understand the basic fundamentals. You want strong band >> from all parties of the the property spectrum, not just investors only.
>> 100%.
you you guys right if I I start throwing to a few questions or was there something else you wanted to to wrap up with that Simon?
Well, the other thing I wanted to um to to maybe think for listeners to maybe have a think about is the the next 12 months is going to be very interesting. Um personally, and this is taking off my buyers agents hat.
Like if I was an investor right now, you know, building my initial portfolio of properties to to enable me to get passive income at some point in the future, I'd be buying as many properties as I can because rents are going to go up. I want to be exposed to that. But I think it it also incentivizes a lot of people to take advantage of this 12-month window where you know you've got you you can steal negative gear. And I think a lot of flippers, a lot of renovators are going to want to be buying up properties now, do a quick ren and try and flip it and sell it before uh June 30, 2027.
Uh so I think we'll actually see a mini boom in the right areas uh off the back of some of these changes. Um not that not saying that to cause panic or panic buying or FOMO. We should always still stay levelheaded and just assess it based on numbers and fundamentals. But um at the end of the day I think especially in the affordable housing market like anything major capital city sub 800K I think is going to be extremely hot property.
And Jeremy, can I just quickly jump in with that because I I've been reading so much about this that I I may have got it wrong. I thought negative gearing was gone as of last night. Have I read that wrong or or what? Because I want to make sure I've also got this right.
>> So for all purchases after 7:30 p.m.
12th of May, budget night, negative gearing will be available up until 1 July 2027. And then post that, no negative gearing. But for people who have purchased pre-budget, um, negative gearing will still apply even post to 1 July 2027.
>> Fantastic, mate. Thank you for clearing that up. All right, I'm going to throw to to a few questions here. I've got one that's just uh come in. Got a few playbook members that have chucked some in first. So, I've got for new investors, this is from Shiv. Is it still a good idea to buy in personal name or is structure now the default way to go? Jeremy, I'm guessing this one is going to be straight directed at you, mate.
>> Look, I'm still of the big believer uh no matter what you're you're entering into the property market for the first time. I still think keep it simple, keep it easy, buying your own name for that first property. You got to factor in the cost of establishing a new entity. You got to factor in the cost of maintaining that entity, which is, you know, two, three, four, five times higher than the cost of your own personal tax return with maybe just one property. So the arbitrage between the cost that you got to pay with professionals versus the potential tax implications short-term long-term that needs to be factored in.
Um also you got to look at the type of asset that you're buying as well. Are you trying to go go for an asset which is going to have a lot of growth at the very start or you know you you've picked the you're thinking you're picking the right horse and it's going to do really well then you might want to look at companies. But and that that way you kind of eliminate the indexation method and then you get to drip feed the profit you make in the company through dividends moving forward in the future to help smooth out that tax so ultimately it stays at no greater than 30%. But just for for basic purposes, your first property, maybe even your second, you might just want to do it personally while you don't have the negative gearing benefits, while you've got index in there that you need to factor in. I think to alleviate the cost that you will have to pay during the longevity or for the longevity of holding that property, I think it that that outweighs that cost outweighs the benefit. If you're bought your first and you're ready for your second and this is a journey you want to take, you'll find now that companies proprietary limited entities which generally are reserved for more trading or for very sophisticated investors, you'll find that they'll come into your portfolio again a lot sooner, structured the right way based on what I said earlier to maintain that best result as accountants that we can get now under the new legislation or new budget proposal is at 30%. Because I mentioned before as an accountant I used to play in the realms between 0 and 47%. Now we're playing in the realms of 30 to 47. And a company is where it gives you that certainty at least when you sell that property you'll pay 30% tax um on the profit. And I mentioned before about indexing. If it's a low low slow growth property that you're going to hold for a very long time, you'll often find that the indexation method doesn't steer too far away from what the capital gain 50% discount provided. So, they're the things I'd be looking at. Keep it simple, keep it straightforward for the first one. Progressively now, as you grow, you'll enter into companies as opposed to trusts. Um my worry is is that if the high use of companies starts to form part of everybody's investment structure uh state governments like New South Wales which at present give a land tax threshold to a company of a million75 grand I guarantee you Chris Mins or whoever's in um the premier of New South Wales at that stage will change the land tax legislation to exclude companies from having a land tax threshold to obtain a bigger crash a bigger a cash grab because trusts were typically the investment entity. Now companies are going to be that new investment vehicle.
>> This is the game. It's always going to be changing and we always need to make sure that we're adapting to the rules, playing it the best that we can because lending is going to change with this, the market's going to potentially change a bit with this and the entities that we hold in are potentially now going to to change with this. Uh it's interesting to actually hear you say that even now with all of these changes, negative gearing going aside, that still buying in your own name for when you're at the beginning is potentially still the best way when you're looking at it. And correct me if I'm wrong, Jeremy, but essentially the whole picture of your cash flow when you actually take into account all of your your setup cost, your holding costs, everything that goes with actually running that entity, then you're looking at this going just just start simple and then get a bit more complicated because it's there's more to it essentially. Is that right?
>> Absolutely. I look at life from an arbitrage perspective. A dollar saved is a dollar earned still with that accounting hat on. Um, and I think that's a really good way to attack it.
And as I said, there's always room for growth. And the first property you buy is not the only property you'll buy. And you may not even keep it for the the longer duration of your journey. It might be one of the first ones you sell.
>> Beautiful, man. I reckon the next one's got your name all over this, Morgan.
This is uh from Sparrow. So in the current lending environment, what are the primary constraint limits for portfolio sorry constraints limiting portfolio serviceability and how are sophisticated investors structuring around them?
>> Yeah. Okay. So I think at a high level it comes down to two things because there's only so much I guess mortgage brokers can wipe a magic wand at to make things happen. Mhm.
>> And then the other side of it is like you as the investor like what can you do or change to really make the portfolio grow. So in this current environment I mean I would first of all urge people to focus on what they can control and what they're willing to do even if it is for a short period of time to really give themselves a best chance to increase their borrowing power to maybe release equity to buy the next property and so on. Um, kind of like what we're going over before, like there's also part there's also times where you're going to have to be a bit cautious and like when I was chatting with Jeremy before about, you know, using banks like third tier lenders, like I wouldn't be doing that without having extreme caution or having a plan where you know that you can then do something to then move to a better bank to improve the cash flow, maybe rebalance the portfolio and potentially go again. So things that I'm talking about people that what they can control, it could be as simple as changing or reviewing their living expenses or like as we've kind of talked about in the show like some people could just choose to go and live with parents or friends rentree for a very short period of time that could help them either buy more property, rebalance the portfolio. So to a degree it depends how badly people want it. But then like to the other side too, like there's only so much I can do as the broker with someone's portfolio if nothing's changed. So yeah, we could possibly use entities and use some of the bank's policies, but then there's the um third the two other aspects as well, which Jeremy mentioned. First of all is the cash flow. Does the cash flow check out for you as the investor like with your after tax income, can you sustain that? But then also like the other piece of the puzzle is like where are you buying and what does that mean?
And then if the other member on your team is the accountant like what kind of advice are you getting on that front? Is that the right advice? Like is that the right vehicle? So all of those kind of things come together when it comes to building a portfolio and it's not as simple as that. And also everyone's unique and different. So I think it's it's really depends on those two things overall.
What I'm really hearing with that as well, Morgan, is um making sure that you've got a plan, you've actually tested your options because if you are going to go down the path of expanding, doing 7 8% like higher interest rates, tier 3es, like you said, you don't just jump into that. That's the kind of thing that if you're doing it, it's it's only because you've got a plan to get out of it and away from there as well instead of just expanding for the sake of expanding and then going, "Wait a second. I don't think I can afford to actually hold this," whether it's in a structure or or not.
Yeah. And I mean, jeez, like I'm not the kind of broker that gives like investing advice. That's just not my jam. But like I will tell people like, hey, like make sure you do the cash flow numbers. Like yeah, it's just really important because if it's going to put you in a worse off position or you don't have a plan to improve that cash flow later and I can't do anything to help, then you could actually be in for a world of hurt. So, it's just important to do your numbers before you make decisions like that.
>> Perfect. And uh this next one I reckon's got your name written all over it is Simon. This one is from Jaden if I've got this on right. Um so, what are the best property investment opportunities in this new budget for those who already own properties? How how can we capitalize on it? Essentially, what's what's the big opportunity in the market to come of all of this, mate?
Um, look, stick to the fundamentals.
Stick to where people are moving to on mass. Um, so you know, major capital cities definitely um I think affordable housing areas within major capital cities. I think there's going to be a massive push for um you know, people to whether whether they're starting out or whether they're first home buyers or whether they've uh they used to pay $2,000 a week or $3,000 a week in a in a nice sexy blue chip rental and they're they're having to downsize now. They're having to tighten their belts. I think these are the consistently the areas that not only weather the storm when when when the proverbial hits the fan, but they actually flourish, you know, because at the end of the day, the demand for these areas and and the demand for these um uh uh uh types of properties are unrelenting, you know.
Um, >> and also, you know, again, I've done in previous podcasts that we're targeting these um these sort of uh uh Sydney units now. Uh, you know, and I I strongly believe that these are the types of properties with very high yielding and very low entry base.
They're probably one of the safest uh places to be investing right now.
>> Um, you're getting six to 7% yields off the bat. Um, one thing I will say is there is no excuse now more than ever to pay over retail or even retail. You know, there's bargains galore. Um, we're getting we're seeing tons of them every single day. And really the the the the safest and most riskless way to safeguard yourself is to make sure you're getting something that you have confidence that if you were to sell it the next day, you know, let's not even talk about making a profit. at least you're not going to take a a a um a loss, you know, or a minimal loss after buying and selling costs.
>> Um don't get caught in the hype. Uh I've had a multiple investors call me and ask me, "Hey, Simon, should I buy a brand new properties now? Should I buy an off the plan? Should I target regional?" Uh definitely do not. you know, at the end of the day, I think a lot of people are going to be left high and dry um by making very poor decisions because there's just it's just it's opening the doors to a whole new realm of um uh spruing, >> you know. So, we just be very very careful. Always focus on where people have to live, you know, not where people want to live, not where people even choose to live, but where they have to live. Um, and I think if we just stick to that, you know, you'll be fine. And in fact, you'll you'll probably flourish at the end of the day. So, yeah.
>> So, it's more of a needs industry as it's always been for yourself. It's it's not a um a luxury. Hence why you've always looked at it going, "Okay, what are the what are the places? What are the types of properties that everyone's always going to have demand around?"
Because that's the stuff that's going to be safer moving forward no matter what changes.
>> Yeah. Yeah. And it's also the stuff that's going to see the biggest rent increases, you know, not just off the back of the proposed changes, but also because you there just going to be a huge amount of people needing these properties, right? So, what might start off as negative cash flow >> um if you were to buy today might only be a very temporary thing. I mean, even some of the properties, you know, we've been buying in Perth and and and other parts of of big cities a year or two ago, they've already increased rents by 200 bucks a week, you know, uh just with two two um two lease renewals. Uh so, you know, if you kind of want to be exposed to that, you kind of want to be exposed to as much rental increases as possible. Obviously, based on the fact that, you know, negative gearing is not going to be uh is not is going to be a thing of the past. But the other thing I want to mention is look I'm I'm almost like I'm I'm very confident that a lot of these policies are going to change you know probably in the next two years you know at least until the new a new government comes into place. So another thing I would probably suggest is don't make any rash decisions based on any of this. You know don't don't change your strategy. Don't change your structure.
Don't go out and start buying, you know, 50 off the plan units because almost certainly you're number one, you're going to be overpaying, but you're probably going to have some regret, you know, a couple years down the track as well. So, um, >> just buy 49 of them instead of 50.
>> Yeah, text me.
>> Buy one.
>> People are spending lots of money, Todd, on text messages at the moment. I must have received five or six text messages of new house and land packages have just been made available. Literally texts.
It's hilarious just how quickly the vultures come out.
>> There's there's a few companies out there that'll be licking their lips right now. But um and if you guys are enjoying this as well being our very first Facebook live, I I actually think we might do more of these. This is funner than what I thought it would be.
Um, but I if you you're look if I can do words. See, this is why I don't like the lives and why I was thinking I would have just cut that if this was a normal episode, but I can't now. Anyway, if you guys are enjoying this, hit the like button, leave a comment. I can already see so many more comments flowing in.
We've got more questions to unpack that have come from you guys that have already sent in. And like I said at the very start, we sent an email out to everyone in the pizza and property community. And whilst we get into a few playbook members first, we've got so many. We had literally hundreds of questions submitted. So, we've actually had to kind of amalgamate a few of them.
Otherwise, we'd be here until like the next day. So, I'm going to jump into a couple more here. I've actually got one that Morgan, I think this is actually going to be a really good fit for you, mate. I'm just going to pop this on the screen here. With budget restricting negative gearing, how will borrowing capacity and serviceability assessments change across personal name company whoop, sorry, that just went away.
Sorry, let's do that again. uh company structures and SMSFS.
>> Yeah, I think like if it were to get changed by banks then I think from a borrowing power in personal name kind of like what we looked at there's going to be a bit of a negative change. Another thing as well which like I didn't really model in but also could be a thing too like and it's what Jeremy actually touched on is if tax brackets are going to change in the background as well like the bank's serviceability calculators might slightly tweak.
>> I don't think it's going to be anything massive but look it could be small it could be big it could be the difference between one bank or another for some people. Um so for personal names I think yeah it might actually slightly decrease if it's from a company or a trust sort of entity um then I think it's more or less play on like most banks assess that without the negative gearing because in reality those entities don't get it.
>> There's a small handful that do but who knows that might actually change. Um, and then with SMSF, like it's it more or less gets assessed the same way. I don't know if they're going to strip that out, too. But I think that one is also play on. So, that's kind of my thoughts on it. I guess we'll probably have to wait and see what the banks do, though.
>> Yeah, that's going to be the interesting thing. And how how much like I think I called you at like 8 a.m. this morning being like, have you got emails yet from them? Have have they said anything yet?
>> Yeah.
>> But, um, obviously we're going to have to be waiting a little while for for the official notice for that one. But, thank you for that for Morgan. Um, we've also got uh one coming in here from Brad.
Brad, uh, actually, no, did we do Brad?
No, we haven't done Brad. No. Uh, it seems the main benefit of discretionary of the family trust is nullified. Uh, is a unit trust the right alternative and is there a CGT exempt window to restructure? Jeremy, I reckon this one's pointed straight at you, mate. Yeah, there's look the one of the focuses of utilizing a discretionary trust as an investment vehicle has changed and changed quite substantially. As Simon mentioned, there might be some changes and amendments. This is one of those ones which will have lots of changes and amendments. I was having a chat with some people at you know very large end of town at the Price Waterhouse Coopers and their their um their take on it was this is going to definitely uh be amended. They're going to get some consultation. So what people need to do is monitor the release and consultation papers of the um draft legislation which people do have access to if you put on the budget website. Um so that's something you guys can have your say on anyone can but big enter town tends to have a little bit more money to lobby that.
>> Sorry. Sorry Jez just to quickly jump in. When you say to monitor it what exactly are we looking for there mate if we're monitoring that?
>> They will they will actually provide the draft legislation that they will be talking about. This is all public. Uh once it goes once it's been set at budget night, then they can actually release the draft legislation so you can look at it and there'll be consultation.
There'll be people submitting stuff which again you can get access to. So that's something that I think will be quite contentious. Everyone I've spoke to doesn't even know what they're going to do, how they're going to use it from a a credit imputation credit system and how they do it. At the moment though, bucket companies are a little bit dead because of that potential double taxation, 30% tax to the distribution and then tax with inside the bucket company as well. Um, I personally wouldn't look at unit trusts just yet. I think companies would be probably better because the same thing will apply taxed at 30% straight away when it distributes and then that acts as a credit within your own name and you'll then pay your own marginal tax rate where with a company um you'll get you know your 30% flat tax based on the profit it earns. I do think though we'll a big pivot will occur. will see these two structures being a self-managed super fund and a company now primarily being used for investing moving forward because super funds were look from the looks of it untouched. They've left the one-/ird discount. They've left the 15% tax rate and super funds as a structure still without a doubt even after the budget night remain and probably even further remain to be the best tax incentivized way to create wealth. So that's what I'm seeing on my side. That's what I'm looking at personally now. I'm going to start to filter in more non-consessional contributions into super. That's my personal circumstances to buy more assets in super to being a better tax in advised structure to keep it away from this 30% and potentially higher tax rate that Labor want Labor have wanted to impose.
>> Right. Thank you for that Jeremy. I've got another one here from this one's from Kush. Could you lose money after indexation if your July 1, 2027 valuation is higher than your 2029 sale price? If this can happen, what do you do with that loss?
Um, the answer is you don't I'm trying to think of the best way. You don't you haven't lost money because you probably sold it for more than what you paid for it, but you won't pay that portion of indexation tax. So yes, there are circumstances where you have no indexation uh no profit from the realized gain of the indexation method.
However, what the Labor government have done to to kind of capture taxes based upon the indexation method not being as strong, a minimum floor of 30% tax after the indexation methods taken into account. So regardless of your profit that you've made, they're going to take 30% tax. And that's for people which are on lower incomes that decide that you know what I'm going to sell I'm going to take time off work and try to reduce my tax so it's below 30%. That's not going to be the case. You'll be paying tax at 30%. But again entering the question the capital gain tax calculation if you've held it before budget night is split into two calculations. One being a 50% discount method from ownership to the 1st of July 2027 valuation. Second calculation is the indexation method from July 27 onwards and you potentially could pay no tax under the indexation method if it hasn't realized again >> mate now this kush um whilst that was brilliant Jeremy thank you very much for the detail I think this is we're talking a lot more detail now and this is something that we're going to have to go into on probably more of a personal level as well man but I actually wanted to throw to one that I've got here from uh s or for Simon rather which I think this is probably one That's just the burning question on a lot of people's lips, which is essentially, is it still possible for someone building or already holding a portfolio? Is $2,000 a week passive income still achievable in 10 to 15 years? And how do you and how do you protect the equity you've already built along the way?
>> Um the the answer to that question is who knows, right? like the the the I mean it looks like the world's changing as of yesterday. The world was different 6 months ago. The world was different 12 months ago. Uh when I was building my portfolio, you know, we we we I went through high interest rates, low interest rates, um you know, co good economies, bad economies, like it at the end of the day, you can't predict the future. Like I I I subscribe to the saying make hay while the sun shines.
like we we all need like to achieve passive income you need to buy consistently buy you need to consistently build your portfolio um sustainably uh and you know sometimes some years when it's when it's when when the sun's shining you know you want to buy three or four or five properties right but sometimes if you're a little bit strapped for cash flow or if the world's a little bit shaky or your personal situation you go through something then you just got to pause I think long term at the end of the day I mean we've we've got plenty of examples of people at least in the past 12 months you know that have been accumulating these properties uh you know look I wouldn't say average maybe slightly above average income earners you know buying 12 properties o over the course of the year um I don't know to be honest if that's still going to be possible moving forwards uh but all I do know is you know for the past 10 to 20 years the fundamentals of what we buy and where we buy has never ever changed and the overarching thing is to keep getting these these bargains that we keep talking about. Um, so as long as you keep doing that, if you've got the cash flow, and by the way, I I said this before, I think cash flow is the negative cash flow if you're buying in the right areas is going to be a um a very temporary thing. You know, just with rising rents and and and so on, that that is almost certain. Uh now, you know, you should you should find yourself in a much better cash flow cash flow position 12 months down the track, in which case, you know, you might be able to pull out more equity or get more loans to buy more properties. Um, in terms of protecting your current equity, I think I mean, I'm not entirely sure what you mean by what what what you mean by that, but you know, if you don't if you don't have to sell, you shouldn't sell. And now there's even less incentive to uh to to get rid of houses.
You know, you've got more incentive to keep them. So, so just hang on. I think >> like you're saying the fundamentals aren't changing. This isn't the first time we've had a shakeup. I mean, this literally happened um in the what was it mid80s, 85, I think. Negative gearing got got taken away, then it got reinstated. We had APA change everything from 2017 to 2019. Round one, round two, round three. Like, >> we've we've seen shakeups before and the market might move a little bit, which is why I wanted to actually throw to this one here. I think this is from uh Anthony. I'll just chuck this one on the screen. This is a YouTube comment as well. Again, keep your comments coming, guys. Uh, are we expecting property prices to slow down? It seems like the incentives to invest in property has reduced. Kind of goes a little bit counter to what you're just saying here, Simon, because like the incentives, actually, not counter. So, let me let me reword that. It's more so that the incentives longer term, realistically, they're still here, but that short-term sort of sugar hit or that short-term kind of taxation incentive in your personal name, that may have changed.
But if if we can look in that to that core of the question of are we expecting prices to slow? Who wants to jump into that one?
>> I think in certain areas they definitely will slow and in certain areas they'll definitely go backwards. Um but like everyone has kind of mentioned already uh multiple times. The underlying problem is still not addressed. We have a huge housing shortage. We've got tons of people that need houses. We've got build costs that are still going up.
It's like, it's almost as if like, oh, okay, cool. First- time home buyer. I'm a first- time home buyer. Now, I can go off and build a $2 million house, you know, in Sydney uh tomorrow instead of buying something existing like that. It doesn't work like that. Um, so you have to be very particular in what markets you play in. Um and you know like I keep saying I think these these sort of uh you know ultimately where where uh migration or mass migration is happening is is the safest place and probably the most logical place to to to keep buying.
Um I mean keep one on cash flow. Um you know if you're if you are in a bad situation or if you are slightly negative or or hugely negative then obviously um you know have a bit of a buffer in place. I'm a big advocate for that where whether it's a cash buffer or uh whether it's a bit of equity uh sitting in a in a property like just make make sure you've got an ounce, you know, a bit of an exit. I think that goes for whether it's we're going through good times or bad times. Um but in my opinion, this is like there's going to be huge opportunities almost immediately. Um yeah, especially in some of these uh sort of affordable housing major capital city markets. be be calculative and be deliberate. They're the the two best words that you can you can take from today. Calculative and deliberate in the way that you buy something, in the way that you strategize on the way in and on the way out.
>> I can just hear those words coming out of your dad's mouth, Jeremy. That sounds very much like a >> words he used this morning. He did a budget presentation for for the staff today and he he closed with as accountants our role is to be calculative and be deliberate and decisive with our words and as investors be deliberate and calculative and that way you are strategizing what market you're getting into at what times and what structure you're going to use and what's your business plan for that property. That becomes important. You no longer can just buy for the sake of buying it.
There's got to be a little bit of a business plan for this investment which is most likely the largest investments people make in their life.
>> Definitely not the time to be speculative like you know don't don't chase the new mine opening. Don't chase the new the big you know development project that's happening in in the middle of Broken Hill or something. Um >> Broken Hill is so lovely.
>> Is it I shouldn't have said that. Let's catch a question Daniel. to these changes. Now, I'm I'm actually going to throw to a few questions that because this has already been going for an hour and a bit. I don't know who's been joining, who's jumped in, who's jumped out. So, there's going to be a few that we might sort of just very quickly retouch on and visit.
Want to make sure all of you guys are getting as much value out of this as possible. So, Daniel, do these changes regarding CGT apply to properties within SMSFS? Jeremy, >> no, not from the budget.
>> That was a very quick answer.
I'll help. There's so many great questions I've seen. So, we'll help people fly through it.
>> Absolutely. Um, so as far as uh this one here, what do we got? Uh, from ys, will these ch or this changes with these changes increase the prices of established homes?
>> Simon Morgan, Jeremy, >> I think they absolutely will. Uh, like I said, in these sort of bread and butter areas, you know, I think it's inevitable. there's just going to be less supply. The demand is still there.
In fact, the demand's probably growing, but there's just going to be less people wanting to sell or or or incentivized to sell.
>> Um, yeah, absolutely 100%.
>> That's a good comment from people like us, right, who who know and are in tune with the market. But, but for 80% of the people that are out there that get consumed by that um >> what's it called? The equation, whatever that they use in the meta space, what's the word for it, Todd? when people the algorithm when people are getting consumed by the algorithm they're going to be bombarded with the best of the best marketing right so >> I think you'll sentiment will be still a little bit low for a while while people um go through their capitulation phase and then they realize the world's actually going to become >> sun comes up goes down at night and people still coming in and houses still need to be to be built and used but once people realize that after 3 to 6 months that's when we'll start to see a a rebound It is a Coke bottle at the moment. It has been shook and shook and it's going to continue to get um get shaken. And when it pops, we are going to see the biggest run on property, probably bigger than we've ever seen before. And it's what happened in ' 85.
And it's why they took it away in ' 87.
>> I want more arm movements from you, Jeremy. This passion, mate, this is what I'm after. Like I I want to throw to a question here because and I'm I'm interested on everyone's opinion on this. This one's actually from Victoria Williams. Uh, do you think first home buyers will be nervous about buying unrennovated houses because building costs will go up, making it easier to buy unrenovated properties for investors? Now, Simon, I already know your stance on unre or renovation projects. Uh, everyone's a little bit different on this one, but this is something that personally I actually saw in Ballerat probably about six weeks ago. We made a ballerat opens episode.
Everything that was renovated flying off the shelf. Still heaps of demand on it.
soon as it was unrenovated, people just weren't as interested. That gap between unrenovated and renovated, I feel, is is going to widen again. Very interested to hear everyone's take on this one. Who wants to jump in with that first?
>> Adrian Patelli still is Adrien Patelli still buying properties on the block.
>> Adrian, I think he's making his own block now.
>> Okay. Well, then they stopped him from buying them.
>> He was still buying properties. I'll renovate whatever he wants to buy. I can tell you that.
He's the best.
>> Sorry. Morgan, did you have something you want to jump in with that, mate?
>> Yeah. I mean, like my kind of philosophy on renovating has kind of changed a bit.
Like I used to kind of stick to that when I was at the beginning stage of my portfolio and I kind of had no option to. So, it was a bit different. But I actually kind of subscribe to what Simon kind of talks about, which is just buying good solid houses where you can rent it out straight away. It doesn't require any work. Um, or if it does, like anything that's just cosmetic, nothing structural because like if you're going to be renovating something, there is a very good chance, especially if it's a big rena, that things could go wrong. Um, so you can do all the best planning in the world, but who knows, maybe there's like, I don't know, electricity wires in the roof that have to get removed or I don't know, like something's just not there that you or the builder can't see until they look under whatever it is that they're looking under. Um, so I think it's just better to stick to the good fundamentals. And if it's a property you're going to live in and you're kind of like emotionally married to it, then that might be a different story. But I think from an investing perspective, I always come back to the path of lease resistance. So just buying something that's got good fundamentals. You don't have to add too much value to it. If anything, just a lick of paint or something like that and then get a tenant in straight away.
>> Yeah, 100%. I mean, if you think the cost of renovating is high, try building a brand new property, you know, that's that's even higher, which is what uh all these uh uh government changes are are trying to push first home buyers to do, which I still don't understand how that's going to happen. Um because most first home buyers I know are are limited by a finite budget. Um but yeah, you know, look, I mean, if you're buying if you if you're buying a house to live in, you know, I think I think renovating makes complete sense. you know, you got to be comfortable, but you know, you don't have to do it all in one whack.
You can do it over time. Um, and you can just make small improvements along the way. Uh, my stance for investment properties is always the same. You know, when you in when you buy a property and you renovate it, it's a massive waste of time, a massive waste of capital.
Personally, I'm terrible at it. I can't even hammer a bloody nail. Uh, let alone do a renovation. It'll take me like eight months to do a a renovation that a tradey might take, you know, three days to do. But it's a waste of capital. That capital can be deployed into other investments. It can even just sit in your offset account, you know, especially in these times where you probably need a little bit of more cash flow anyway. Just buy it clean, safe, and tidy, rent it out, fix up what you have to over time, and then when you sell it, do the big fancy rena to hopefully attract um you know, some emotional buyers that that might might be willing to pay a lot for it. Um because if you if you renovate and stick tenants in, it's going to it's going to they're going to they're going to stuff it up. You know, your brand new walls are going to be scratched, your carpet's going to be scared, you're going to have to redo it in 10 years anyway. So, or for what, you know, an extra 50 bucks in rents? I I just don't think it's worth it personally.
>> Now, I'm going to throw to another question here. So, this one's in from um I'm just going to go Radar. Now, I've actually been getting in trouble for swearing on the podcast recently by comments and by my mom. So, I'm just going to read this slightly differently.
This one really uh annoys me uh that all the assets are affected. How does buying shares out growing sorry uh on growing uh or growing your business uh for an eventual sale got anything to do with the first young home buyers. So I'm essentially what they're saying here, Jerem I think this is more so one for you is if they're changing capital gains tax realistically this has been changed across the board. This isn't just changing for people that are buying property. Correct.
>> Correct.
>> Would you mind jumping into a little bit more over like sort of quick detail around what's uh what's that looking for or looking like rather across all assets.
>> That is a disaster. That's that's the only thing I can say. they haven't factored in what the indexation method did during that time when Keading brought it in and the level and reduction of productivity during the 90s. Um, if you sell your business and you sell the shares in your business, often people issue shares when they start a business at $1, might buy 100 shares. They might sell it to somebody else. They might sell their business for 400 grand, the shares of it. You would normally get a 50% discount, meaning you would only pay tax on $200,000 of the $400,000 sale. Well, now you got an indexing method. Um, CPI indexing on $1 per share is peanuts. And that's going to absolutely kill the ability for people to then on sell their business for someone else to buy it and take it to a new level. They just haven't understood why Hold and Castello, the dynamic duo, the two best people that ran the country economically and fundamentally for growth during that period of time they were in in government. They didn't understand why they took it away and we will understand what that looks like because productivity will slow again and I understand why they want to try to do it to slow down the property market probably won't happen but there are so many implications from a shares perspective where the indexation method just falls apart. So again, I do think that's going to be lobbied quite heavily once people actually understand what the real numbers are behind the indexation method and how it works to things like selling the shares of your own business.
In the '9s, no one started businesses.
No one bought businesses. There was nothing that we were doing which was advancing our economy or our country.
And from 2000, we had the best 26 years of economic prosperity. Yes. driven by mining but also driven by entrepreneurship. Give people the tax break and you'll often find things become better. If you tax tobacco like they've done significantly through the roof, we're collecting $13 billion in 2021. We're now collecting $3 billion a year from tobacco excise because they want to tax it to the hilt. People then will start vaping and they'll start buying illegal cigarettes. If you tax things too much, people lose motivation and drive to do inventive and creative things.
>> It's so true. I'm not proud of this, but one of the reasons I quit smoking was because the last packet I bought was 50 bucks. I was like, I don't want to do that anymore. That's ridiculous.
It worked on me.
>> Anyway, next supposed to be you're not supposed to be paying 50 bucks for sigies anymore, apparently.
>> That's a long time ago now, but um I got another one here. This is probably a bit more of a Jeremy question as well. A house bought five years ago. Currently, PBO, if you move out and put in put it into the rental market, can you negatively gear? Great question, Sam.
>> At present, the dialogue says that you can because they talk about that you owned the property prior to 7:30 p.m.
the budget night. Um, so at present, how I read it and interpret it, the answer is yes, you can. Uh but I would definitely stress to say that you should be reviewing that because could be something little silly that they they bring in and as they really define what the legislation is when it goes through the lower house and then through the upper house. We've got to remember everyone it will be debated lower and upper. There will be compromises. Deals get done all the time in the upper house. Pauline's blocked a lot of things. The Greens have blocked a lot of things. The Independents block a lot of things. And that's where compromises happen. And it does. Deals are done. They always say deals are done in the upper house of the federal government.
>> Sorry, man. I'm just going back here. I just saw a question pop up that I didn't do. So, someone's jumped in. Whoever that was, if you know how to do that again, go for it. I'm happy to answer your question, but I don't know how the hell that popped up on screen. Uh, can you see that, Bianca? Okay. Anyway, sorry, Jeremy. Uh, that just distracted me a little bit there, mate. Um, uh, let's go here. All right, let's jump in another one.
I'm just going to open up another question. I'm just looking for the one that just popped up, but I can't actually see where that one came from.
Two sec, guys. Did does anyone else anyone else know how to beat box? Yeah, here it is. Okay, cool. Here we go. Um, this this one's coming in from uh I think this is Kelvin. With 30% minimum tax on family trusts, can I pay admin fee/management fee uh to a lower income spouse bene Oh, wow. You're getting creative, mate. I can see where this is going. Uh beneficiaries, adult kids instead of income distribution.
Uh there needs to be a commercial nexus, uh Kelvin, which means a connection to you paying them a wage, admin fee or management fee. It's a wage. That's how we pay people from corporate entities.
uh if there is no commercial nexus connection to that then you are part 4 a tax avoiding and you'll just add to the coffers of Jim Charmer's bank account that he needs to continue spending habits.
>> Tax minimization and tax avoiding is two very different things. So if if we're going down the tax avoidance uh path, we want to make sure that we're um yeah just not doing that really.
Let's let's keep it as uh minimizing things. I wanted to to throw to another one here. We got Simon. Sorry, I'm actually just reading through a few of the comments. I probably shouldn't. One was about uh Yeah, I can't even read any of this out. Guessed voter. You guys seeing anything that you want to jump into here, Morgan or or Jeremy as well?
>> Here we go. Whoever's doing that on the team, there's a few people. Yeah. Can you keep doing it? I think this is this is better if someone else takes this over. I think I'm spinning too many plates here. Here we go, guys. Uh, so why is Jim Charmer's the treasurer and not Jeremy? Well, Jeremy, I think that one's got to be for you, mate.
>> You can share with everyone my ambitions because I've shared with you it many, many times. What's my ambitions over the next 10 years?
>> Your your ambitions is to get into politics. And we haven't actually talked about exactly what kind of a seat that you're going for, mate. But I would assume just knowing your personality for quite a while now. You're probably gunning for the top seat, mate. PM, >> I'd love to do it. I think we uh we need a businessman in there. We need someone who actually understands economics. Uh not career parasites.
>> Absolutely. Now, if you want to vote, no excessive uses of here here.
>> Anything else?
>> I won't I won't be saying I can tell you that in any Senate inquiry. I'll take that on notice. I'll either know the answer or I don't can't stand the game play.
>> Yeah. Here. Here.
>> It was It was It was both cute and slightly annoying yesterday watching the last end of the budget and Fred was sitting there watching it and he's only just learned how to clap and they all started clapping him and then Fred started clapping. I'm like, "Don't you clap that guy. He's just taking away your money, mate." Anyway, um mate, I I did want to throw to a few more. So, if you guys have got a couple more questions locked and loaded, but otherwise, I think we're about to actually run out of time. So, if there's a question that you guys have got that you're wanting quickly thrown in as a bit of a rapid fire, make sure you're chucking it in the comments below and we'll try and get to as many quick ones as we can. But, uh, Bianca or Jen in the background, if there's anything else that you guys want to pop on screen, just as we're we're waiting for it, you can chuck one up here.
>> I'm just reading the crypto comments.
>> Wait for Jeremy. Crypto's crypto is going to get um crypto is going to get absolutely smacked because you can't use something that swings so up and so down and then have an indexation method to it because a lot of people you know no one's got a vision I'm going to hold crypto for the next 40 years. Some do and it goes to the moon then comes back down and goes back to the core of the earth.
>> But those people wanting to utilize and invest in crypto for a couple of years indexation method is going to kill them.
I I just don't think and because it's it's been gone for 26 years, people actually don't understand the implications of what the tax does in the indexation method. So, hence I've said, you know, the next two structures that will widely be used. We've heard about trust. They've been around for hundreds of thousands of thousands of years in in different methods and different shapes and forms, but but companies and super funds, they're going to be probably two of the most common structures. And I know I'm going to quite heavily focus on my super personally with non-consessional contributions, something I wasn't looking to do till later on, but I just don't want to pay any more tax. I think we're just getting taxed to the hilt. Um, with auxiliary taxes, not just normal income tax, but auxiliary taxes.
>> Love it, man. And there's another one here, Jeremy. If uh property sold at capital loss, what if so what will be happening to carried forward losses of negative gearing? I think this comes back to a little bit of uh what we were talking about the very start.
>> Small medium business accountants I might charge hourly for this one but um >> the capital loss will be carried forward as long as the as well as the negative gearing loss that you've accumulated.
So, if you've bought a property, you've made a loss on it, you sold it for less than what you bought it for, that capital loss is carried forward. Nothing changes with that rule. And if there is revenue losses you've generated with this new legislation they're looking to put through, those revenue losses from the property will also be carried forward and they can be utilized against the future rental income of the property. And we all know that capital losses can only be utilized against capital gains. So, nothing changes from that. just the addition of the revenue losses from rental properties similar to the carry forward revenue losses when you have a sold trader um loss in your personal tax return. Those losses there's certain rules for you to utilize those losses against your wages taxable income and there's rules there where you got to defer it and they can be utilized at a later date when you make a business soul trader income. So it's going to be quite consistent with rules that are already there. Um, yeah, I'll put the I'll put the invoice in the mail.
>> Hope that's answered your question, guys. And we've got a few more coming in as comments, but most of this uh here we go. Uh, can we give Jeremy some rest, please? He's been uh Yeah. Okay. I think it's time for for all of us to to jump off of this live shortly anyway, but especially Jeremy, mate, this has been fantastic for market insights from yourself, Simon. Realistically, keep buying. making sure that we're buying in solid locations where there's always going to be demand. Making sure that you're buying in a price point that's got some real affordability around it.
The blue chip side of things is nothing that you've ever really gotten behind and and spruked before. And it doesn't surprise me that you're still backing the exact same horse because there's been changes in government, there's been changes in policy, there's been wars, there's been everything that's happened beforehand and it's still about moving forward with those same fundamentals.
Morgan, if I've understood everything that you've put forward, mate, it's really around has borrowing power dropped, unfortunately, yes. Has it dropped like completely and it's just dead? No. But has it gotten more expensive if you want to build a portfolio to that larger scale to going into the four, five, six, seven? Yes, you're going to be looking at more third- tier lenders. Realistically, correct me if I'm wrong. I think you were kind of always looking at third tier lenders in a lot of cases when you really wanted to scale. Maybe not every single time. It depends on your income.
This is the big thing as well. It's always going to depend on your personal situation. Which segueing over to Jeremy, realistically, buying that first property, if you're a newbie investor in your personal name still has weight to it, even though you might not get the negative gearing concession from it, again, depending on exactly when we're talking about here, for the next 12 months, whatever it is, but there's still going to be company costs, trust costs. There's that ongoing structural uh structural maintenance. I'm going to say that you need to actually be putting into which is a few thousand a year as a firsttime investor. So, keeping it nice and easy in your personal name, but then sort of combining you guys together a little bit here, Jeremy and Morgan, the structural side of things as far as borrowing power, that by the sounds of things hasn't really changed. If you're buying in a company, buying in a trust, it's probably going to be pretty similar to what it was before, if not exactly the same. Again, we're still, as much as I'm calling you every day, Morgan, uh we still don't know what's actually happening just yet as far as what the banks are going to change policy-wise.
And Jeremy, you're talking about the company potentially really being the structure to buy in moving forward if someone is going to use structure, if that is the right fit for them. SMSFS and companies are going to be the potential winners moving forward out of this from several different perspectives. But the big caveat around this as well if you guys weren't listening a little bit earlier on was around right now land tax pretty good if you're buying especially in New South Wales I think the one that you gave as an example 1 million75,000 was the land tax threshold but then if all of a sudden companies become the main structure that everyone holds in get ready because then that will potentially change in two years 10 years five like who knows but it's always about pivoting moving with the market and doing everything that we can and that's what this live was about. And thank you so much for everyone all of you guys for for jumping onto this. Everyone that's been listening to this as well. Keep your questions coming with this as well because Jez, I know all of you guys have got your own YouTube channels. I'm pretty sure as well. I'm sure you'll be happy to jump into the comments wherever you can. But I do want to say though, they're all going to be ridiculously busy. I know how much you've got, especially you, Jeremy. I'm sure you've probably got 86 emails just since this live has started, mate. So, if there are the questions that you've got, put them into the comments. I'll be jumping into as many as I can and I'm sure the guys will as well. But um if I take everyone one by one, are there any final words of wisdom, Simon, that you want to leave everyone with tonight, mate?
>> Um first of all, I'm pretty sure Jeremy's AI, you know, his mouth like like I'm lost. Like when Todd's asking a question about some thing, one of those things that Jeremy answered, I was like lost 30 seconds in and then Jeremy boom boom boom boom boom, you know, we got we got Jeremy chat.
>> Um but no, um look guys, I think I think I think a lot of this stuff is going to be changed like straight up. I I can't see this as being sustainable. Um don't make stupid decisions based on it. Don't start hunting for house and land packages and new builds. Um, stick to what works. Stick to where people actually need to live. That's that's the bottom line. When I'm old and gray, I want bloody I I want I want my passive income coming from, you know, houses in in in big cities where if they go vacant, there's there's a line of people waiting to to uh to to rent again, you know, like not in bloody whoop whoop, not brand new properties that are overpaid for. Like yeah, that's that's always the bottom line. It's always has it always has been and nothing the government changes will will ever change that either. Um but arm yourselves with people like Jeremy and Morgan because they can do things that I can't. Um they can do things that nobody can. Uh the advice they give Yeah. is just incredible. So yeah.
>> Awesome. Thank you, Simon. Morgan, anything else that you wanted to to wrap things up with, mate?
>> Yeah. I mean, look, I I think some of these changes, like Jeremy very much mentioned, the Coke bottle has definitely been shaked, but I think when we kind of zoom out and look at things over time, I think it's just really important to just stick to good investing fundamentals like cash flow, buying well in good areas. And at least from my side, like buy properties that you can actually afford and not the kind that are going to put you in a worse off position. And >> if you are going to put yourself in that position, like develop a plan with your team, people like the guys in this call here to figure out like is it worth it?
What can we do to maybe improve that? So then it actually does work out to be a good scenario. So that's my kind of parting words for this.
>> Love it, man. Jeremy, what do you want what do you want to say to take us out or do we need to reboot your AI? Have we ran out of credits? No, look, I think I think Simon and Morgan have been brilliant with their summaries and I wouldn't wouldn't change a word they both said. I think it's um they're looking at it from a helicopter view and it's it's spot on. So, I'm going to kudos to to to Morgan and Simon and say spot on.
>> Fantastic. Thank you so much, guys. And if you guys are still in the live stream now, if you've enjoyed this as well, if you could hit that like button, that would be amazing help for us. Otherwise, I'm going to end the stream here. Thank you so much. Keep investing. keep moving forward safely and make sure that you surrounded yourself with your expert team to keep smashing that goal. Thank you so much, guys.
>> Thanks, guys.
>> See you.
>> What button do I push?
>> I think you're still on live.
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