Scrap negative gearing and suffer the consequences, lobby warns

by Julia Corderoy23 Sep 2014
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.

 

COMMENTS

  • by Incognito 23/09/2014 11:10:26 AM

    Make negative gearing only for new buildings.

    Save the tax breaks for new housing, which we so obviously need and which creates jobs.

    Reinstate the first home owners grant - to get poorer people on the ladder.

    (zillionaires won't be on welfare anyway).

  • by Rod 23/09/2014 1:27:19 PM

    I am sure negative gearing was quarantined for a period in the late 80s and house prices were depressed as investment slowed. They then spiked briefly when it was brought back in. Might have been an early Keating initiative??

  • by Nathan 24/09/2014 10:38:02 AM

    What utter rot: negative gearing (and CGT discount) driven investment in property is almost entirely about EXISTING property. It does absolutely NOTHING for creating new property (why would it? you get tax breaks on buying an existing property). That's why since late 80s the investor loans have been used predominantly for existing property - currently sitting up around the 90+% mark.