Tax policy changes to hurt landlords, tenants

By Kay Rivera | 07 May 2019

The Labor Party’s planned modifications to negative gearing and capital gains tax will bring consequences to both tenants and landlords, a new report from the Housing Industry Association (HIA) predicts.

“HIA has always said that changes to negative gearing and capital gains tax for housing are bad policy,” said Graham Wolfe, HIA managing director.

Wolfe said that rental supply is crucial, noting 2018’s September quarter when Sydney rents dropped in real terms for the first time since December 2006.

“The recent additional supply of rental properties has underpinned the improvement in rental affordability. Changing the tax treatment on residential investment properties risks undoing the good work and lifting rental prices,” he said.

Research commissioned by HIA and conducted by JWS Research, revealed that 52% of the respondents believe rents will rise as a negative impact of the changes.

HIA also found that 92% of renters aspire to buy their own home, and Labor’s proposed changes will weigh heavily on this group’s savings plans.

“If these changes are made, rents will rise as supply dries up due to a lack of investment in new housing. This will make renting a home less affordable. If rents rise, renters saving for a deposit for their own home will take a backward step,” said Wolfe.

The Labor Party plans to limit negative gearing on newly built properties, which means that net losses, including interest cost, will be permitted to be offset against an investors’ total taxable income. At the same time, the tax will be payable on 75% rather than 50% of a property’s capital gain.

These changes are anti-investment, according to Wolfe. “They fail to recognise that private rental accommodation provides homes for almost three million families and reducing the supply of private rental homes will only lead to an increase in rents,” he said.

Wolfe believes that the problem with housing affordability cannot be solved by taxing housing.

“Yet this policy seeks to do just that,” he said.


Top Suburbs : willliamstown , cardiff south , goulburn , spearwood , belmont


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