Home buying thread

  • Guest, it's time once again for the massively important and exciting FoH Asshat Tournament!



    Go here and give us your nominations!
    Who's been the biggest Asshat in the last year? Give us your worst ones!
Siliconemelons

Siliconemelons

Naxxramas 1.0 Raider
12,287
18,520
Someone explained and I forgot - but how the Zillow estimate can change - without them saying it changed... like my house was 273, now its 243, yet they still say +xx$ this month... it had to do with how their prices are all calculated in relation to local and smaller zones and where your house is +/- % of those numbers... so those "base" numbers change, yours does also but your +/- over the base is the "same" and that's the zestimate curve?

did I get that right?
 
P

Picasso3

Silver Baronet of the Realm
11,333
5,323
Xadion said:
Someone explained and I forgot - but how the Zillow estimate can change - without them saying it changed... like my house was 273, now its 243, yet they still say +xx$ this month... it had to do with how their prices are all calculated in relation to local and smaller zones and where your house is +/- % of those numbers... so those "base" numbers change, yours does also but your +/- over the base is the "same" and that's the zestimate curve?

did I get that right?
Click to expand...

They redid their formula before and it adjusts everything to fit.

So i have emails with say a 200k value and if you go to the site and look at history it'll never show over a 150k value.
 
Siliconemelons

Siliconemelons

Naxxramas 1.0 Raider
12,287
18,520
Yeah I think they are in the are in the middle of a new calculation.

I think their new estimate has some issues with exempt to public record listing - next door is a cop and his value is 111k and no history... it wasn't like that before- it's usually a few k lower than mine (now as like 240s from 270s)
 
Lanx

Lanx

<Prior Amod>
66,227
150,931
I close this Fri, somehow we fanagled a new furnace, and water heater is only 5 years old, if the ac keeps up, hopefully I won't have to worry about heating, cooling.

(I plan to clean out the registers, clean the blower, change filter, vinegar clean the water heater, and straighten and clean the find on the compressor, outside, along with caulking windows and doors)
 
  • 1Solidarity
Reactions: 1 user
Hoss

Hoss

Make America's Team Great Again
<Gold Donor>
27,665
16,110
sakkath said:
Renting can be a better option depending on the market. In Sydney for example, you can rent a house in a reasonable suburb for $7-800/week. Buying the same house would cost $2mil, or over $2000/week just in interest alone. Renting and investing the thousands per month difference in cost in the market instead can easily be a better financial option considering the decade of double digit capital gains is probably over. Of course then you lose the satisfaction of owning your own home. It becomes more a lifestyle decision than a financial decision.

In other Australian cities on the other hand, it's $400/week in rent or $300k to buy.. Good rental return for investors there.
Click to expand...

I'm not going to argue with you about the Australian market, but do you really think people are renting out houses for less than the mortgage payment?

There are instances when renting could be cheaper than owning. If the house is already paid off, or you're only renting a room. I'm betting the most common instance though is that the renter can't qualify for a loan or is trying to stay off the grid.
 
sakkath

sakkath

Trakanon Raider
1,791
1,101
Hoss said:
I'm not going to argue with you about the Australian market, but do you really think people are renting out houses for less than the mortgage payment?
Click to expand...
I think and know for a fact that (many) people are renting out houses for less than the mortgage payment. In fact, based on Australian Tax Department statistics, 2 out of 3 investment properties in Australia is making a loss. -> There were 1,213,595 individuals with a negatively geared property over the 2010/11 financial year
There are 2 main reasons why people do this. First and foremost, they are expecting large capital gains. Secondly, they expect to use "negative gearing" (google it) to gain a tax advantage.
 
Dandai

Dandai

<WoW Guild Officer>
<Gold Donor>
5,918
4,504
I've never understood the math on losing money to pay less taxes. Can one of you bros help me see what I'm missing? My [grossly oversimplified] understanding is that hypothetically a person loses $10k to save $2k on their tax bill. In what situation is it more beneficial to lose $8k (-10+2) than it is to gain $8k (+10-2)?
 
P

Picasso3

Silver Baronet of the Realm
11,333
5,323
I'm my mind depreciation is a big help because while you're losing money on paper its obviously not costing you money.

I'm not sure about Australia and negative gearing.
 
  • 1Like
Reactions: 1 user
Cad

Cad

scientia potentia est
<Bronze Donator>
25,910
50,997
Dandai said:
I've never understood the math on losing money to pay less taxes. Can one of you bros help me see what I'm missing? My [grossly oversimplified] understanding is that hypothetically a person loses $10k to save $2k on their tax bill. In what situation is it more beneficial to lose $8k (-10+2) than it is to gain $8k (+10-2)?
Click to expand...

Their expenses could be overstated (or rents understated) in order to show a loss regardless of the financial reality, also.
 
  • 1Like
Reactions: 1 user
sakkath

sakkath

Trakanon Raider
1,791
1,101
If you're in the top income tax bracket, if you make a $10k loss then you get $4500 of that straight back on tax, that helps cushion the loss while you're waiting for your capital gains.
 
Cad

Cad

scientia potentia est
<Bronze Donator>
25,910
50,997
I know I usually enjoy spending $10k to get $4500 back, that is always a winning investment.
 
P

Picasso3

Silver Baronet of the Realm
11,333
5,323
Making over 150k household (unsure exactly) you can't show a loss which sucks dick. You can carry it over though
 
sakkath

sakkath

Trakanon Raider
1,791
1,101
Cad said:
I know I usually enjoy spending $10k to get $4500 back, that is always a winning investment.
Click to expand...
The end goal is capital gains. The negative gearing just cushions the loss while you are heading there.

Picasso3 said:
Making over 150k household (unsure exactly) you can't show a loss which sucks dick. You can carry it over though
Click to expand...
In Australia you can bring an investment property loss into your tax return in any income bracket, thereby getting back some of the tax you paid on salary or other investments. Works quite well for people in high income brackets.
 
Cad

Cad

scientia potentia est
<Bronze Donator>
25,910
50,997
sakkath said:
The end goal is capital gains. The negative gearing just cushions the loss while you are heading there.
Click to expand...

That makes zero sense though, why not just break even or show a small profit, even if you are taxed on it, how does losing 10k in real money to get a $4500 tax break make sense? It's not like you don't get your capital gains if you show a profit. You'd get capital gains AND your profit.
 
P

Picasso3

Silver Baronet of the Realm
11,333
5,323
Cad said:
That makes zero sense though, why not just break even or show a small profit, even if you are taxed on it, how does losing 10k in real money to get a $4500 tax break make sense? It's not like you don't get your capital gains if you show a profit. You'd get capital gains AND your profit.
Click to expand...

If you are in prime earning years 55-60 and invest your regular income in investment property you would get to deduct those losses against your income and realize the majority of your depreciation when you are in a higher bracket. Afterwards you would have cap gains income.

I understand buying 10k of volcano insurance to save 3k in taxes is stupid, but if you put 10k in real estate to save 3k in taxes and then get 2k a year in cap gains later, it may make sense.


I think.
 
sakkath

sakkath

Trakanon Raider
1,791
1,101
Cad said:
That makes zero sense though, why not just break even or show a small profit
Click to expand...
Well of course if you can make a profit then you would. But when a property costs $2mil and the rental market means it's only worth $800pw then you can't make a profit on it. To break even you'd need to charge over $2k per week rent, which if you tried would mean your property is empty and you're taking even higher losses. The fact that 2/3 Australian rental properties are operating at a loss just proves how overheated our market is. I have rental properties which are positively geared, but they are not in Sydney or Melbourne. Getting a positively geared residential rental in Sydney&Melbourne is nearly impossible (unless you have a lot of capital).

And yes taking losses now to make gains later can make sense, when your property is appreciating 20% or more per year which the Sydney market has been. However I think that the heat is almost all gone from the market meaning people buying into Sydney (or Melbourne) these days and taking losses hoping for capital gains down the track either have to be playing a *really* long game, or they're in for disappointment.
 
Cad

Cad

scientia potentia est
<Bronze Donator>
25,910
50,997
sakkath said:
But when a property costs $2mil and the rental market means it's only worth $800pw
Click to expand...

Then they shouldn't be buying it, it's overpriced. They're just speculators at that point, not businesspeople. It might work out for some of them but it's no better than going to the casino.
 
Khane

Khane

Got something right about marriage
20,634
14,381
Sounds like it's just a really long payoff on investment. Real estate to keep in the family and hand down for generations that will generate pure profits for all your children/grandchildren who inherit it.

The tax incentives just soften the blow for.... ~30 years...

I don't see why anyone would buy a single family occupancy residence as any type of investment vehicle unless you were a flipper. In any area of the world.
 
Hoss

Hoss

Make America's Team Great Again
<Gold Donor>
27,665
16,110
I don't get it either. When I was young my parents started a business. They had a hell of a time finding a location even though there were many empty newly built shopping centers close by. My parents told me they checked in on them, and the people who owned them simply didn't want to rent the spaces out. Supposedly they only built them because they needed a tax write-off. I finally decided it must be something that fundamentally changes when you've got lots and lots of money. Richers gunna rich.
 
You must log in or register to reply here.