More support to retain negative gearing's status quo

Real estate and property lobby groups have renewed calls for there to be no changes to negative gearing after the release of report that claims the system makes for a more even property market in Australia.

The report, Australian housing investment: analysis of negative gearing and CGT discount for residential property, was prepared by ACIL Allen Consulting and commissioned the Real Estate Institute of Australia (REIA) and the Property Council of Australia (PCA), both of whom believe it debunks a number of myths surrounding the issue.

According to the report, two thirds of investors who benefit from negative gearing earn a taxable income of less than $80,000 per year, which REIA chief executive officer Amanda Lynch says shows the scheme doesn’t only benefit wealthy individuals.

“Mum and dad investors are overwhelmingly the ones who benefit most for the ability to negatively gear their property investments,” Lynch said.

“This isn’t some tax lurk for the wealthy, rather an incentive for people on low to average incomes and it has benefits for the broader economy, as the report notes ‘the ability for investors to gear and use debt is a crucial part of investing and fostering economic growth.’”

According to the report, one-third of all dwelling construction in Australia each year is driven by investment and PCA chief executive Ken Morrison said tinkering with negative gearing could see that dry up.

Negative gearing and CGT are doing all the right things when it comes to improving housing affordability for Australians,” Morrison said.

 “They tick all the boxes by increasing supply, giving people an opportunity to get into the housing market and helping ordinary Australians build wealth for their future.

“The reality is that if negative gearing was abolished there would less investment and rents would go up.”

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