Middle class sacrifice lifestyle to become property investors: Ed Chan

Most property investors only own one property and fall into the category of middle class, according to Ed Chan, the founder of Chan & Naylor Property Accountants.

"They certainly are not considered 'rich'," he said.

"In fact they should be applauded for the sacrifice to their lifestyle (due to the shortfall created by negative gearing) as they attempt to invest for their future and in so doing, reducing the government's burden in providing them an old age pension when they retire."

Chan said these investors saved the government billions of dollars by not having to provide public housing for those unable to buy their own homes currently. 

Supply is a very important factor as successive governments have not provided the policies to generate more supply in past years, said Chan.

"You may recall that the Keating government attempted to remove negative gearing in the eighties but reversed their decision when the queues for public housing doubled."

"Whilst taxpayers have claimed a total of $13 billion in losses in their tax returns the actual revenue forgone by the government is calculated at their individual tax rates. 

"Thus at an average tax rate of 35% the lost revenue is only $4.5 billion.

"So the government has not lost $13 billion dollars by allowing negative gearing but rather $4.5 billion is the actual dollars forgone.

"Public housing provided by the government only accounts for around 4% of investment properties.

"The other 96% of housing is provided by the private investor," he argued.