Nickoo,
I was hoping you would have figured this out
for yourself
Do you know what the CPI is ???
a rough example
CPI is say 3% per quarter x 4 = 12.% pa
means your dollar less buying power, less value
you need 1.12 for the same dollar value of prior year
I am sure there is a PPI as well, considers all the costs of maintenance of property
if I bought a house last year for say 200000 or had cash in the bank or shares or whatever asset
the value of the dollar on CPI above means I need 224000 to recover the value of my property or assets to keep the value ie;200000 x 1.12
However like the prior post said, location location location.
Most properties Vic sold by auction, so I could put a price on the property, but come auction day it is determined by supply and demand.
If it is in a country area where banks pulled out, industry left town, schools closed down nothing there, no demand all above figures mean nothing. Might be worth $50000, what value the buyer puts on it.
Do you know anything about capital gains tax?
Up until sep 1999, before tax changes, we used the cpi monthly to calulate if tax was payable on a profit
on disposal of an asset. that calculation was fair, in that if the cpi rose which it did for most quarters, your asset was deemed to have kept pace with inflation, you would only pay tax on the excess above that figure.
there were times when the cpi did not rise
eg of the cpi index sep 94 111.9 sep 95 117.6
111.9/117.6 = .095
hope this explains it
read the red stuff below
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