Restricting negative gearing would erode affordability, says HIA: Do you agree?

Restricting negative gearing would erode affordability, says HIA: Do you agree?
Restricting negative gearing would erode affordability, says HIA: Do you agree?

It’s contentious: Should we keep negative gearing?

The Housing Industry Association has released research that said restricting access to negative gearing for investors buying residential property would reduce the amount of investment in housing, erode affordability and push rents higher.

HIA managing director Shane Goodwin said that discounting residential negative gearing in isolation is a retrograde step for tax reform in terms of efficiency and equity.

“New housing is one of the most highly taxed sectors in the economy, and the removal of negative gearing would only make that situation worse and discourage investment,” said Goodwin.

“This would in turn reduce housing supply and increase the cost of renting,” he said.

Goodwin says that negative gearing promotes private investment in the rental market, stimulating economic activity and taking pressure off social housing.

“With an aging workforce and future pressure on services, policy settings such as negative gearing that promote wealth creation and self-sufficiency in retirement should be promoted,” he said.

“It is important to remember that negative gearing is not the domain of so-called ‘wealthy investors’. Figures from the ATO demonstrate that 74% of tax payers receiving rental income have a taxable income of less than $80,000.”

The much debated topic has been under discussion on Property Observer for years.

There have been many suggestions of how it could be phased out, including grandfathering it out or just slowly toughening the rules. You can read some of those suggestions here.

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Restricting negative gearing would erode affordability, says HIA: Do you agree?

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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Negative gearing

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