Ensure you never miss an issue of the
real estate business bulletin
Negative gearing debate ‘shrouded in myth’

Negative gearing debate ‘shrouded in myth’

by Elyse Perrau 2 comments

A lobby group has attacked several ‘myths’ surrounding negative gearing, including the widespread belief that scrapping the scheme in the 1980s led to higher rents.

The Australian Council of Social Service said it was wrong to claim that the Hawke government's restrictions on negative gearing in the 1980s resulted in rent increases.

“The main reasons for rent increases at that time were higher interest rates and a share-market boom which diverted investment from rental property,” it said in a recent report. 

“Even so, this only happened in Sydney and Perth. Lending to rental property investors still rose by 42 per cent across Australia.”

ACOSS said negative gearing and capital gains tax together cost the Budget $7 billion a year and fuelled housing price booms.

Chief executive Cassandra Goldie said negative gearing is “shrouded in myth” that need to be dispelled so a “sensible discussion” can begin.

"Negative gearing and the tax break for capital gains don't improve housing affordability; they make it worse by fuelling home price booms like the one in Sydney right now,” Dr Goldie said. 

“Less than one-tenth of negatively geared housing investments are for new properties, the other nine-tenths bid up the price of existing housing.

Dr Goldie said it is also false to claim that negative gearing mainly benefits mum-and-dad investors on middle incomes. 

"The reality is that over half of geared housing investors are in the top 10 per cent of personal taxpayers and 30 per cent earn more than $500,000,” she said.

"This is a long-standing problem and it's time it was fixed.

[Related: Negative gearing not a ‘perk for the rich’]

Negative gearing debate ‘shrouded in myth’
lawyersweekly logo
promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2017

The REB Top 100 Agents ranking is the foremost ranking of agents in Australia. It has set the bar for excellence in Australian real estate. To be ranked as an REB Top 100 Agent is the standard real estate professionals strive for. See the full 2018 ranking here!

featured podcast

featured podcast
An industry where the resilient succeeds

Tim Heavyside believes that a strong support team and good foundations are paramount to success in the real estate industry, and with regu...

View all podcasts

Would you consider working for Purplebricks or a similar 'DIY' model?

Yes (7.2%)
No (80.9%)
Perhaps - make me an offer (12%)

Total votes: 209
The voting for this poll has ended on: July 13, 2018
Do you have an industry update?