Report debunks negative gearing myth, warns against removal

by Maya Breen30 Jun 2015
A new report by ACIL Allen, jointly commissioned by the Real Estate Institute of Australia (REIA) and the Property Council of Australia, shows negative gearing and capital gains discount measures are helping to boost the supply of new homes, put downward pressure on prices and give ordinary Australians a better chance of entering the property market.

The report states it has debunked “the myth that negative gearing does nothing to support housing supply” as its research found a third of all new dwelling construction is financed by investors every year.

The report warns that the immediate removal of negative gearing without allowing to carry forward losses ls likely to result in a portion of the average net rental loss - which was, on average, $9,500 in 2012-13 across all taxable income groups - being added to rental prices.

Property Council of Australia chief executive Ken Morrison said, “Negative gearing and CGT are doing all the right things when it comes to improving housing affordability for Australians. The reality is that if negative gearing was abolished there would be less investment and rents would go up.”

“This is middle Australia. 66.5% of taxpayers who earn an annual income of up to $80,000 own 80% of negatively geared properties,” REIA CEO Amanda Lynch said.

“Tinkering with negative gearing would introduce distortions into the tax system and attack confidence, counter to the principles of simplicity and fairness we are seeking to achieve.”


  • by BJ 30/06/2015 10:24:49 AM

    Another report which represents an articulate, independent view of the issues. Well done Amanda and Ken. Seriously tongue in cheek! Oh and rents will go up, history and the facts Ken. The sky is falling!

  • by Gavin R. Putland 1/07/2015 8:26:58 AM

    The report assumes that losses would not be carried forward, which they would. The report assumes that existing arrangements would not be grandfathered, which they would. The report assumes that landlords can raise rents just because their costs increase, which they can't - they already exact that maximum rent that can got for their properties.

  • by DanG 1/07/2015 10:04:09 AM

    Debunked? Please.

    Any benefit in new homes being built to create less demand is negated by the fact 17 investors turn up to buy them vs 1 genuine first home buyer.

    Negative gearing is part funded by stamp duty. Remove the lot!

    Why assist the $80+ income bracket further with tax breaks, it's the lower income earners that need it.