Negative gearing supports renters and housing affordability
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“Reports in The Australian on ATO data shows that almost two thirds of investors are on an average income of less than $80,000,” said HIA’s Principal Economist, Tim Reardon.
Independent research undertaken for the Housing Industry Association (HIA) by The Centre for International Economics (CIE) concluded that increasing the tax on investing in residential homes will force up rental prices, worsen housing affordability and reduce economic activity. This Report backs previous research by Independent Economics in 2014 that modeled the impact of the Henry Tax Review Recommendations on negative gearing arrangements.
“Further restrictions on negative gearing will lower Australian living standards and increase the cost of renting a home,” added Mr Reardon.
“Changes to negative gearing would adversely impact on the housing market, exacerbating the current undersupply of housing and further reduce the efficiency of the housing market.
“This reduction in house supply would also adversely impact on wage growth and GDP.
“Driving investors out of the market will force up the price of renting as nearly 25 per cent of rental stock is provided by private investors.
“Further research in 2017 shows that as the Federal Government increases Capital Gains Tax, that they take two dollars of revenue away from the State Governments.
“At least $1 in every $10 of government revenue is raised from a tax on housing.
“The Henry Review recommendations on Capital Gains tax were clear that changes should not be made until the constraints on housing supply had been addressed.
“We cannot solve the affordability challenge by increasing the tax on housing or by further restricting those that invest in housing.
“The solution to housing affordability lies in less tax and less government involvement in housing than in additional constraints on investors," he said.
Source: https://www.therealestateconversation.com.au/blog/tim-reardon/negative-gearing-supports-renters-and-housing-affordability/housing-affordability
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