Real estate lobby urges Government to retain negative gearing

by Julia Corderoy09 Feb 2015
In its pre-budget submission, the Real Estate Institute of Australia (REIA) has urged the Government to retain negative gearing to encourage property investment and place downward pressure on rents.

REIA chief executive Amanda Lynch says the evidence is clear that both negative gearing and the capital gains tax discount is crucial to feed the supply-side pipeline at a time of a chronic under-supply of houses in Australia.

“Any alteration to the current arrangements would likely result in a need for a greater investment by the Government in social housing and could potentially increase rents - as recognised by the Henry Tax Review in 2010, which stated that the current provisions placed downward pressure on rents,” she said.

The REIA’s Pre-Budget Submission highlights eight recommendations aimed at contributing to Australia’s continuing economic development and productivity while attracting first home buyers back into the property market and improving housing affordability.

The REIA’s pre-budget submission can be found here.
 

COMMENTS

  • by Ron Clarke 9/02/2015 12:19:34 PM

    Negative gearing on new house builds has a positive impact upon the economy, that is obvious. I am yet to see an articulate positive argument for gearing into established property. Effectively, negative gearing skews the market and gives an advantage to investors over homeowners, as tax payers access a reduced borrowing cost, courtesy of the tax deductible interest costs. However, it will be a brave politician that stands between a voter and their tax deduction. What can end, will. It will be the market that will reduce the interest into gearing into property as an investment, when Australia has a correction, or long sustained period of low growth.

  • by Keep it Simple 9/02/2015 6:33:51 PM

    I'd urge the govt to cap the annual amount the extent to which an individual can negatively gear. A cap of $20k per annum of reduction of other income is reasonable and therefore the mum and dads with a single IP are unaffected cash flow wise. This therefore matches the tax benefit of pumping $30k into concessional super which HAS a CAP.

  • by Mark 10/02/2015 11:43:27 PM

    Shame on these vested interests. I believe around 90% of all NG concession is utilised by buyers for established housing investment. To reward investors who engage in loss making investments by shuffling money from the same tax payers who are then priced out of the market due to increased investor competition in the established housing space, to said investors is completely unethical and inequitable. If it wasn't for the fact that the policy makers represent significant vested interests, a moral obligation to repeal NG on established property would have been forthcoming. The arguments around pushing rents down has been debunked, those renting would be capable of buying if the whole system weren't stacked against them due to rorts like NG. Capitalism at It's finest, only able to be exploited by those with privilege. Australia, land of the fair go?