New research has claimed restricting access to negative gearing for residential property would reduce investment in housing, hinder housing affordability and increase the cost of renting.
In a research paper titled ‘Economic Impacts of Negative Gearing of Residential Property’ commissioned by the Housing Industry Association, it is argued that discounting residential negative gearing is a backwards step for tax reform.
“New housing is one of the most highly taxed sectors in the economy, and the removal of negative gearing would only make that situation worse and discourage investment. This would in turn reduce housing supply and increase the cost of renting,” HIA managing director, Shane Goodwin said.
“Negative gearing promotes private investment in the rental market, thus stimulating economic activity and taking the pressure off social housing and the public purse.”
Goodwin says stimulating investment in housing is important for future-planning.
“With an ageing workforce and future pressure on services, policy settings such as negative gearing that promote wealth creation and self-sufficiency in retirement should be promoted.”
The research paper argued that abolishing stamp duty on conveyances should be the top priority for housing tax reform, making housing more affordable for both renters and owner-occupiers.