The real estate industry has urged the Government to retain negative gearing in May, when Treasurer Joe Hockey will announce his second budget. In its pre-budget submission, the Real Estate Institute of Australia has defended the measure, saying it helps renters and investors alike.
“The evidence is clear that both negative gearing and the capital gains tax discount (CGT) feed the supply-side pipeline at a time of a chronic under-supply of houses in Australia," said REIA CEO Amanda Lynch. “Any alteration to the current arrangements would likely result in a need for a greater investment by the Government in social housing and could potentially increase rents - as recognised by the Henry Tax Review in 2010, which stated that the current provisions placed downward pressure on rents."
The REIA's submission has eight recommendations. Along with the retention of negative gearing, these include abolishing conveyance stamp duties and replacing them with an efficient source of revenue
for states and territories; not increasing capital gains tax on property investments; establishing a scheme to encourage young Australians to access their superannuation as a first home deposit; a uniformed approach to the provision of assistance to first home buyers for both new and established homes; continued funding for the Industry Skills Fund; better utilization of private investment to improve the supply of housing for social housing tenants transitioning to private rental; and a mechanism to ensure the availability of reliable data on housing demand and supply to assist in formulating effective policies.