Home buying thread

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?

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?

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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.

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)

Gratz!

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?

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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.

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.

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.

Making over 150k household (unsure exactly) you can't show a loss which sucks dick. You can carry it over though

Cad said:

I know I usually enjoy spending $10k to get $4500 back, that is always a winning investment.

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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

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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 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.

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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.

Cad said:

That makes zero sense though, why not just break even or show a small profit

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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.

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.