Urban Taskforce hits back at ANZ chief over negative gearing

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Urban Taskforce chief executive Aaron Gadiel has hit back at ANZ chief executive Phil Chronican’s suggestion that the government should consider winding back negative gearing benefits for property investors.

"Governments might want to look at whether negative gearing tax breaks are fostering an unhealthy focus on housing as an investment and compounding the affordability issues," said Chronican at a recent American Chamber of Commerce lunch in Sydney.

But Gadiel has pointed out that Chronican’s suggestion flies in the face of last year’s Henry tax review recommendations, and added that 70% of individual owners of rental properties depend on negative gearing to support their investment according to last year’s ATO figures.

"Investor activity in the residential housing market boosts housing supply, by funding the construction of new homes that renters cannot afford to own outright,” he said.

And with the housing undersupply now exceeding 200,000 homes, according to the Urban Taskforce, he believes that public policy should focus on encouraging more investors to enter the residential property market.

"Policies that try to force down home prices, without also reducing the cost of supplying new homes, will only kill-off new home construction," he said.

The Henry tax review examined the cases for and against changing the negative gearing system for rental properties, andfound that:
  • negative gearing for rental properties should be retained;
  • changes to negative gearing should only take place after reforms to the supply of housing, such as the approvals processes around the planning system;
  • the current tax benefit available for negatively geared properties may place downward pressure on rents;
  • stamp duty should be abolished.
Should more property investment be encouraged to boost the housing market? Are you one of the 70% of rental property owners that used negative gearing? Join the debate at www.yourinvestmentpropertymag.com.au/forum

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