Turnbull Government’s stand on Negative Gearing is based on facts, says the REIA

Written by realestateview.com.au in Finance on April 26, 2016

The Turnbull Government have announced there will be no changes to Negative Gearing and Capital Gains Tax and according to the REIA this is the right stand to take based on a rational evaluation of the facts.

“The current tax arrangements, in treating property no differently to other forms of investment, provides an incentive for private investment which increases supply for our growing population, keep rents affordable and eases the burden on social housing”, said REIA President Mr Neville Sanders.

“With large increases in house prices in Australia’s two largest capital cities, there have been many claims that the current tax treatment of negative gearing and capital gains of residential property is exacerbating housing affordability issues. This is simply not the case. Indeed the public interest is being served and advanced through the current taxation arrangements.”

According to Mr. Sanders, the current arrangements provide the opportunity to invest in property, increase savings, particularly retirement savings and improve rental affordability through increase of rental houses on the market.

“There is ample research that shows that negative gearing and the CGT discount are not driving excessive, unproductive and speculative investment in housing but instead they are adding to housing supply with currently $7 billion a year invested in new dwellings.”

“One of these, the Henry Review, released in 2010, recognised that the current tax arrangements placed downward pressure on rents. “

“It is supply that is the critical factor in resolving the affordability problem. Changes to current taxation arrangements will do nothing to address affordability. If anything it will exacerbate the problem.”

“Housing affordability and taxation arrangements for housing are going to be key issues in the upcoming Federal election campaign and REIA hopes the debate will be based on rationale thinking and not perpetuating myths that simply do not hold up to analysis”, concluded Mr Sanders.