So Jeremy, if you had to summarize the property market right now in one sentence, what would you say is happening from your point of view?

Th- there's, there's definitely negative sentiment that's crept into people's thinking, and that's, that's been transposed onto this, onto the property market.

Bit of a Mexican standoff at the moment between buyers and sellers and wanting to know what that, that price equilibrium is.

Um, there's a gentleman you and I both follow, and I know you've done some, uh, recent commentary to some of these videos that he puts out, a gentleman called Tom Panos, which likened the market where we are today to '91, which was kind of the start of the '90s recession, that decade, that recession we had to have, labeled by, um, Paul Keating at the time.

But effectively what happened during that period of time was that prices didn't necessarily decrease.

There just was no entrepreneurial flair.

People weren't investing.

But I think from, with your experience, we really need to explain to people what it would take for the housing market to drop 50%, because I think that's a big fallacy we're hearing out there, "I'm gonna wait for it to drop 50%." They think they're gonna knock on a door and point Piper and hand him 20 bucks and say, "I'm here to buy this now." [laughs] Let's explain, Jeremy, to them what, what it would take for the market to drop 50%.

Mm.

You've spoken to a property professional who will be able to give you a bit of an understanding if there is a property that meets that criteria under the type of borrowing that you can obtain or the amount of borrowing you can t- obtain.

Then it comes to us as an accountant.

We will be able to, and we've been doing that now for the last couple of days, getting entities ready within the space of about a 24-hour period.

So be able to have your entities being established, which will include a custodian company, it will also include a trustee company, it will also include the self-managed super fund itself.

Those entities are required so the bare trust can be created and the lending can be obtained on the limited recourse borrowing arrangements.

You'll ideally, when you're ready to sign a contract for a property, come back to an accountant or a solicitor, get the exact name that goes on the contract together with the bare trust name as well.

Now, i- in terms of actually getting the super out of its current super fund and then into, once these entities are established, obviously they need to be established first before you can move it anywhere, correct?

Why?

A lot of tax revenue's gained through residential property and, and the concessions around super, as we know.

It's 15% tax rate on income, positive income that the super fund generates, and if you held an asset for longer than 12 months, the tax rate's 10%.

Can guarantee there's been a lot of people over the last decade who have bought and sold within super, uh, making quite a bit of money.

Yes, they're only paying 10% tax, but there is all the auxiliary taxes and services off the back of it.

Real estate agents are making money, conveyancers are making money, handyman, uh, you know, going there and fixing the properties, property managers, you know, accountants, uh, property consultants, insurance companies.

There's a hell of a lot of money that's generated off the back of the transactional nature that people were, were utilizing inside self-managed super, especially around the property space.

But the growth of self-managed super fund balances is at the expense of industry funds.

That's right.

Um, they were brilliant masterminds at economics.

They really were the true last politicians with economic backgrounds and legal backgrou- backgrounds and business nous and business minds.

But it was a very unproductive tax.

It was one of the only taxes where if you received a lot of growth from your asset early- You were incentivized to keep that asset even during periods of stagnation, because as that asset did not grow and cost base started to inflate, you actually paid less tax.

So the insanity behind you keeping something and that's not growing anymore 'cause you've front-loaded all the growth, you're now allowing cost base to index, and therefore you're making more money after tax.

And that's why they called it an unproductive tax, because people weren't incentivized to sell.

Yeah.

Mm-hmm

... versus the potential tax implications short term, long term, that needs to be factored in.

Um, also you've gotta look at the type of asset that you're buying as well.

Are you trying to go, go for an asset which is gonna have a lot of growth at the very start, or, you know, you've, you've picked the...

You're thinking you're picking the right horse and it's gonna do really well, then you might wanna look at companies.

But th- th- and that, that way you can't eliminate the indexation method, and then you get to drip feed the profit you make in the company through dividends moving forward in the future to help smooth out that tax, so ultimately it stays at no greater than 30%.

But just for, for basic purposes, your first property, maybe even your second, you might just wanna do it personally.

When you say to monitor it, what exactly are we looking for there, mate, if we're monitoring that?

Mm-hmm

...

September of 1985 that were purchased as capital gain tax free, and anything after that you pay capital gain tax.

World was gonna collapse in 1985.

I remember speaking to my father about it, what was the sentiment, and he goes, "It was, uh, it was life destroying.

Um, you know, property prices weren't gonna grow.

No one's gonna invest in property." Back in 1985 when it was brought in, and we've probably seen probably some of the largest growth in the three decades post that.

Mm-hmm.