• Obituarykidney@lemmy.world
      3·
      58 minutes ago

      Building/land developers. Husband is a software dev and we still can’t afford a mortgage in Australia lol

      The house were renting for $700/week was built in 2014 and sold for $215,000. Current owner lives on the other side of the country and bought it two years ago for $890,000. We’re in a rural suburb 60km from the city.

      • thevoidzero@lemmy.world
        2·
        39 minutes ago

        Wait 2 years ago? The mortgage being high should mean the houses bought recently are no longer profitable to rent otherwise you should be able to pay mortgage that is less than rent yourself.

        I’m in USA and only Houses that are available for rent here are houses people bought pre-covid or earlier, when the mortgage was way less or it’s paid off, so it’s profitable for them to rent it out with current rent

        • Obituarykidney@lemmy.world
          1·
          28 minutes ago

          I think they’re banking on the fact that property prices continue to rise at exponential rates, while taking advantage of negative gearing - which is a big contributor to the housing crisis.

          Essentially, operating a rental at a negative income rate allows you to offset the “loss” against other tax obligations like your income. So they’re probably breaking even, or at least saving taxes/paying zero taxes, and the house will be able to be sold for a huge profit in a couple years. Labor (our major left wing party - more like centre right these days) lost the election pretty hard a few years ago when they tried to end negative gearing. It was the talking point of the right back then and it worked because all the boomers and well off have investment homes.

          • thevoidzero@lemmy.world
            1·
            6 minutes ago

            I’ve seen similar talks about people doing it here as well, but not for hours. I think you have to manage it yourself for certain hours a week for it to qualify. I am not sure.

            But the part I don’t understand is, the taxes they have to pay when they sell their house that they did not reside in, should have a lot more tax than the tax they have to pay on salaried income. Is that not the case? I’m not into business side so I’m not knowledgeable about these, but it makes sense to tax more on business profits compared to someone’s salary.

            And if you have tax brackets, paying little taxes now might be better than paying no tax and later having to pay huge tax on the same amount because it’s not distributed across tax years when you sell