Support for Negative Gearing

In a recent debate, both the government and the opposition ruled out the abolition of negative gearing for the purpose of property investment.

The REIA says that this is fantastic news for renters, affordable housing and real estate investors.

Negative gearing, for the purpose of property investment, in its current form is addressing the supply of rental accommodation and is complementary to the goals of the Housing Affordability Fund (HAF), according the REIA.

The Hawke Government abolished negative gearing for property in 1985 only to have it reinstated in 1987. During that period rents increased by 57.5 per cent in Sydney, by 38.2 per cent in Perth and by 32.0 per cent in Brisbane. At the same time, building approvals fell by 13.8 per cent.

When negative gearing was reinstated, the government noted that any tax advantages conferred by negative gearing were countered by the CGT regime when capital gains were realised.

To amend the current negative gearing provisions for housing as some critics have suggested, would be treating real estate differently to other asset classes and create a resource misallocation, says the REIA.

The only other question to consider with the looming election, is when are any of the major political parties going to release a specific housing policy?