Vince Scully

So you don't get to use those losses to shelter the gain.

This is just about while you're holding it.

So if you make a profit in the year, you pay tax on it.

If you make a loss in the year, you don't get to offset against other income that doesn't come from residential property.

But what this really does is it makes the

traditional, you build up a bit of equity in your home, and then you go and borrow some of that equity back to pay the deposit on investment property and then borrow 80%, so you're now 100% geared the new property, that becomes highly uneconomic now.

It's quite a big deal.

So when you get approval for a home loan, the banks look at how much your income services, and they will give you credit for the tax refund you're gonna get from your negative hearing.

To put towards the mortgage payment?

Yeah.

which becomes a bit of a circular argument.

But at a typical 80% borrowing and a half a million dollar property, that's worth about $4,000 a year, which means it's going to reduce your ability to borrow by

$200,000 in that type of scenario.

If you're going down the 100% borrowing, in fact, we looked at a case today where the investor was living at home with mum and dad, mum and dad were guaranteeing the loan, so they were borrowing the full purchase price plus stamp duty, plus the buyer's agent's fee, and probably a little bit of furniture.

Yeah, might as well buy a new kitchen sink while we're doing that.

And that took like $300,000 off their borrowing capacity.

It was down 8% earlier.

Yeah.

It opened 7% down.

I mean, I think there's quite a few things happening about CBA.