As the Federal Budget announcement draws ever nearer, Laing+Simmons have added their voice to the list of industry insiders calling for the Government to leave negative gearing alone.
"Speculation is mounting that the Government will again look at cracking down on negative gearing for investment properties in the budget,” said Laing+Simmons general manager Leanne Pilkington.
“Are the lessons of the past so quickly forgotten? When the Keating Government abolished negative gearing in the eighties the ramifications were so disastrous it was reinstated two years later”.
She went on to state that negative gearing for property investors was a key driver for new development, and must be maintained if the Government is serious about job creation.
“Building approvals in recent times have been down – already a worrying sign – and builders can ill afford another reason for developers to remain idle,” she said.
"Tinkering with negative gearing at this delicate time for the residential market is a recipe for disaster. This is the time when Government should be supporting investors to enhance the viability of new developments and, ultimately, promote new supply to ease the affordability crisis.”
Speaking of the critical undersupply of rental properties on the market, particularly in Sydney, Pilkington added that “discouraging new investors, while encouraging existing investors to flee the market, is obviously not the answer.”
Rumours have also been spreading that the exemption on capital gains tax for principle places of residence will also be wound back – a move that Pilkington labels as “archaic”.
"The prospect of introducing a tax on selling the family home is in some ways even more concerning and archaic in its logic,” she said.
“Surely the family home – oftenthe result of decades of hard work – should remain free from Government coffers? A tax of this nature would serve only to further reduce supply while punishing hard working families in the process.”
Does negative gearing prop up an artificially priced housing market? How would a winding back of the CGT exemption on PPORs affect your investments? Join the debate at www.yourinvestmentpropertymag.com.au/forum
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