NOTE, ARTICLE No: 4
This article is the fourth article, of a group of articles, about Australia and the housing problems cause and remedy discussions. We have started with these farming articles, because farmers can also have financial problems, in a way similar to the housing problems, since the Social Security System fails to help the farmers, and fails and punishes the small rental investors.
Welcome to our article, The Assets Test Problem, must be solved.
How the assets test affects property owners.
Dear readers, we started to write these articles about what is happening in Australia, when we saw that the farmers were having problems to survive, because of the drought, so, we thought that the Australian government should help. But they cannot help the farmers, because they own properties and the assets test exclude them from government help; it is like other property owners that are excluded also. This is what we are going to write in this article.
Anyhow, today in
this article, beside talking about the farmers, we are going to talk about the
assets test for other groups, and above all we are going to talk about the
assets test, how it affects rental property owners in a more detailed way than
we have done in our other articles, and then, about other unfair government
taxes levied on properties.
The assets test punishes rental property owners.
The assets test is a problem for the
pensioners, because it does not consider, if it is possible to earn the same
amount of money that will be cut off the pension. The main problem here is
that, when the treasurer makes the budget, he doesn’t even look at this possible
outcome, he just wants to save money and cut the pensions. In fact, nobody is
thinking about this negative issue, I would say that the entire population
thinks that people that own rental properties are rich people, so, they don’t
need the government pension, when rental houses are a real problem with
pensioners that own one rental house only, because if they get a government
pension, the pension will be cut off so drastically that they would have been
better off, if they didn’t have the house at all. I believe that the assets
test on rental properties, is set three time as much as it should be for the
small property owner to break even, and this is what I am going to show you in
this article, where I will make it clear with an example.
Anyhow, before I write about that, I am going to suggest
that to fix this injustice about today assets test, which discriminate heavily
against the small rental property owners, because it puts them in a
disadvantaged position financially, the only thing that comes to my mind is
that whoever makes these budget and laws, must keep in mind that he should give
these properties owner a fair go, if he wants to keep the Australian economy
going the best way possible, or I should say, at least as good as it was a few
years ago, before the assets test was changed.
The aim is to achieve the most benefit for the country, I
believe that to achieve you need people that are self-starter and work hard,
like the small property owners that have worked hard during their lives and
have paid their taxes on what they have earned. They saved some money and
invested it on a second house, hoping that when they would retire, they could
be better off financially, but it did not work the way they wanted, because of
the unfair assets test changes that the Australian government has made
recently. You see, these self-starter people need to believe that if they work
hard, they will be better off in the future.
Here I can only say; what is wrong with the people in
Canberra? Don’t they see that they are killing the will of the people that want
to progress by working hard? This is the second most important group of people
that work physically hard; the first group is the workers that work for a wage.
This first group of people politically belongs to the Labour Party, these
people are happy to work for a fair wage, and if they own their house they live
in, so, most of them are not self-starters.
The second group of people, the small property owners that
are usually hard-working people and self-starters can belong to both parties;
so, if the coalition wants more votes from this group and stay in government,
they need to fix the mistakes they have made, when they changed the assets test
in a way that punishes severally anyone that gets a government pension. I say
punishes them severally, as I am going to show you, how the assets test and
other things discriminate against the pensioners, so, it makes life very hard
for them. Anyhow, my views about the assets test that discriminate against
the small property owners, in the example I am writing hereunder.
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The assets test
punishes small property owners.
Now let us talk
about how today assets test discriminate and punishes financially the
small property owners. To show you that, hereunder we have written an example.
So, we have chosen a couple that we call Mr. and Mrs Smith, they are both
pensioner and receive a government pension. The figure that appears in this
example are all rounded figures, but they are close to the real figures, when I wrote this article the first time.
Now, let us write
this example.
Mr Don Smith and
his wife are both on government pensions, but today they don’t get much
pension, because of the assets test. The Smith couple thinks, and I believe
that, the only way one could describe today assets test is that whoever made
these laws are cruel people, because the assets test discriminates against
those small property owners that own a house for rent, since it is not possible
to live on the money that their property can earn, so, let us see how it works.
One of the problems exist because of the deeming setup, where the government
calculate that people can earn $3.00 per fortnight per every thousand dollars
you have in the bank, or anywhere else including properties. In fact, owning
properties is the worst thing you can have, because it affects the owners in a
disadvantaged way, like the Smiths that we are talking about here.
The house they rent
is valued at $650,000, plus a few more belongings their assets test are nearly
800,000 dollars so, they only get about $100 per fortnight each, because of the
assets test.
Now, if they didn’t
have their rental property, they would get the full pension, which would have
been, $690 each per fortnight each.
Now, let us try to
calculate how much the Smiths can earn from their rental property in Brisbane.
This property is an old three-bedroom house, on a large block of land that is
valued at $550,000, this house is rented at $450.00 PW, so, if they are lucky
and the house is rented the entire year, they would collect $23400.00 this is
before expenses.
Now, what are the
average expenses for this house; The Brisbane City Council rates are $600.00
per quarter; the Urban Utilities average $450.00 per quarter; this will come to
$4200.00 per year; the insurance is $1200.00 per year, the land tax (this may
vary, but let us say that they have to pay it fully in this example) so, the
tax is $6550.00; maintenance can vary, but let us say $1500.00, then there is
the fee for the real estate agent say $1500.00 per year.
Let us add this
numbers up. So, $4200 to Brisbane city Council rates and water +1200
insurance+6550 Queensland government land tax +1500 maintenance+ 1500 to real
estate agent letting fee, it = $14,950
Calculate total net
earnings for the year, is $23400 income-14950 expenses=8450
The Smiths have
made $8450 net in one year. Do you think they can live on that? Here some
people may say that not everybody pays the land-tax, but even without the
land-tax, the Smiths will only earn $15,000.00 from their rental property.
This is a lot less
than if they were on the government pension, which would have been nearly
$36000.00 for both.
But now they only
get 20,200.00 at the best, and all the trouble to rent their property.
I believe that
these negative things must not happen, it is not right when you have worked
hard to put yourself in a better financial position, then suddenly you find
yourself worse off. Because some government idiots have made this huge mistake.
I believe that
these mistakes must be fixed from the present government, because if they don't
the people that have been hurt will vote them out of government.
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Anyhow, today I can add that the mistake of the past government to set the assets test on everything at three dollars per thousand was the mistake that has destroyed the rental market, since most of the small property owners are forced to sell their property to live. Therefore, if the present govenment wants the small investors help on rental properties, they must abolish the ASSETS TEST on affordable rental properties.
Well, somehow, I have had my say, and I hope that it is clear enough what I have said. So, see you in my next article, which will be about, The Australian Social Security Must Be Equal.
To see more and the original article click on this link, The Assets Test Problem.
See you soon.
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NOTE. This article above, is the link to the following article, The Australian social security must be equal. This article is also the fourth article of a group of articles that we want to publish. The aim of these articles is to demonstrate that, the Australian Social Security System fails to help those that need their help. And we believe that it must be equal for everyone. The greatest problem is created by the assets test anomalies, so, the ASSETS TEST must be abolished or adjusted, so that those anomalies are eliminated. Because this is one of the reasons why, there are not enough rental properties on the market. But the greatest problem is that the politicians do not see it that way, and want to make laws that would stop anybody to invest in rental properties, so let me explain.
For me there are three main things that the government can do, to come out of this rental crisis: give more rent assistance to the low income earners, abolish the assets test on affordable rental properties and low other levies, so that the small investors can keep renting at affordable price, and stop foreign ownership on rental properties, that is pushing real estate prices up, and the rental market must follow to go up, because the properties cost more.
Some politician believe that the government should build, affordable rental units to solve this rental crisis, but for the government, to build an infinite number of affordable rental units, is not practical, because it will cost the tax payers several times more than helping the present rental set up, as we have suggested above.
To read all the blogs of this selected group click on this link, http://menfranco.blogspot.com,
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