Week 5: Home Ownership

1) When it comes to investing in property, it is generally a huge decision to be made by Australian households. What are the important factors that a person needs to consider before going ahead with such purchase?

* Costs: on-going costs such as council rates, maintenance costs agency costs etc Taxes, such as CGT, GST, stamp duty Price of the property * Possibility of capital growth * Address: social network advantages * Macroeconomic circumstances: interest rate, property price etc * Income level: liquidity

2) What are the advantages and disadvantages of investing in property? Despite economic downturn in recent periods, there are various incentives provided by …show more content…

6) Tax law requires that for an outgoing or a loss to be deductible to the taxpayer, the expenditure must fall within one of the two so-called “positive limbs” and not fall foul of one of the four “negative limbs”. Discuss both positive and negative limbs in the context of general tax deductibility? How is it different with specific deductions? * Must satisfy the Positive limbs: loss or outgoing is incurred in gaining or producing assessable income or necessarily incurred in carrying on a business
Must not fall in the Negative limbs: an outgoing or loss must not be for personal reasons, must not be a capital outgoing, must not be non-assessable purposes or excluded by legislation.(elaboration)
There must be a connection between the deduction claimed and the taxpayer’s income, which means if the taxpayer didn’t incur these expenses there would be a reduced ability to generate assessable income. * Specific deductions are set out in the legislation and specify the rules for allowing that deduction, unlike general deductions, the 2 positive limbs and 4 negative limbs.

7) Given the same dollar value, an offset is more tax effective than a tax deduction which allow government to implement their