Property investment expert busts 'myths' about negative gearing

by Julia Corderoy22 Oct 2014
As property investment has been under the microscope of late, one industry expert has come out and busted some common 'myths' about negative gearing and property investment.

Ben Kingsley, chair of Property Investment Professionals Australia and chief executive of Empower Wealth Advisory has refuted the argument that negative gearing favours the wealthy – telling Australian Broker “it is the biggest myth of all”.

“In [my] business and what I do each day, they’re mum and dad investors coming in and they’re basically saying they want to take responsibility for their retirement planning. They realise that the government isn’t going to be able to provide strong pensions for them,” he said.

“I definitely support that it’s not the super-rich or the elite, its actually traditional mum and dad investors, and we can see that in the ATO statistics as well. We’re talking about $1.8 million people who are actually claiming rental income as part of their tax each year. It’s definitely spread right across the board.”

According to an analysis of ATO figures by the Housing Industry Association – which also supports negative gearing – 74% of tax payers receiving rental income have a taxable income of less than $80,000.

When asked about the argument that negative gearing encourages speculative demand that pushes prices up and first home buyers out of the property market, Kingsley told Australian Broker that is also a common myth.

“Again, this is another myth in my view. Let’s understand that the property market in Australia is over 15,000 suburbs and there are lots of areas where housing is very affordable – there are obviously areas where price points are quite attractive or entry level,” he said.

“What we are actually seeing is commentary around the big cities. If we take New York, Hong Kong, Singapore or even London as an example – where negative gearing doesn’t exist – the property prices in the inner city locations are still very expensive. That’s because people want to buy in those locations – they want the lifestyle, they want the conveniences. So I am definitely saying that’s more media hype than what it is in terms of true reality.”

 

COMMENTS

  • by Incognito 22/10/2014 9:31:07 AM

    Here we go..

    There will be ads on TV soon defending the elephant in the room.

    Like warm and fuzzy Clubs caring about problem gamblers (or the minerals council rescuing puppies or something).

    House prices are being distorted by the tax rules.

  • by Bottom Line 22/10/2014 10:04:58 AM

    A good article.
    See how the property market goes without negative gearing....it would send us back to government built housing to house our citizens - and this requires more taxation to build & upkeep. It was the reason they had to bring negative gearing in in the first place...to stop the drain on taxpayer dollars to build rental housing.

  • by Saul says 22/10/2014 11:50:29 AM

    Negative gearing only on new houses.

    Watch the money flow into the supply side of the problem.