Report debunks negative gearing myth, warns against removal

A new housing affordability report shows Australians’ chance at home ownership has increased thanks to negative gearing and capital gains discount



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.”

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