There’s been a lot of talk recently about Negative Gearing and it’s long term position in our investment landscape. Some believe it should be removed as it allows the rich to get richer and feeds the property market and thus makes it a lot less affordable for those trying to buy their first home.
New research released by the Housing Industry Association (HIA) confirms that restricting access to negative gearing for residential property would reduce investment in housing, erode housing affordability and put upward pressure on rents.
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. This would in turn reduce housing supply and increase the cost of renting. Negative gearing promotes private investment in the rental market, thus stimulating economic activity and taking the pressure off social housing and the public purse.
It’s 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.