Why negative gearing and CGT discount must stay: REIA/PCA

A report jointly commissioned by the Real Estate Institute of Australia (REIA) and the Property Council of Australia (PCA) reveals the positive impact negative gearing and capital gains discounts have on the property market.

The REIA says the report – Australian housing investment: analysis of negative gearing and CGT discount for residential property – shows negative gearing and the capital gains discount boosts the supply of new homes, puts downward pressure on prices and allows Australians to get their foot on the property ladder.

According to the report, around a third of all new dwelling construction is financed by investors every year – “debunking the myth that negative gearing does nothing to support housing supply”; while two thirds of property investors who benefit from negative gearing earn a taxable income of less than $80,000 a year.

“Mum and dad investors are overwhelmingly the ones who benefit most for the ability to negatively gear their property investments,” says REIA CEO Amanda Lynch.

“This is middle Australia. 66.5% of taxpayers who earn an annual income of up to $80,000 own 80% of negatively geared properties.”

The REIA says the report shows removing negative gearing of the CGT discount altogether for property will dampen investment, diminish rental supply and increase the likelihood that in the short to medium term, rents and property prices will increase.

“The immediate removal of negative gearing without allowing to carry forward losses is likely to result in a portion of the average net rental loss (which was, on average, $9500 in 2012-13 across all taxable income groups) being added to rental prices,” the report states.

According to PCA chief executive Ken Morrison, arguments for removing negative gearing and the CGT discount don’t stack up.

“They tick all the boxes by increasing supply, giving people an opportunity to get into the housing market and helping ordinary Australians build wealth for their future,” he says.

“The reality is that if negative gearing was abolished there would less investment and rents would go up.”

Lynch adds: “Tinkering with negative gearing would introduce distortions into the tax system and attack confidence, counter to the principles of simplicity and fairness we are seeking to achieve.”

Morrison says the focus should be on real barriers to home ownership such as the increase in stamp duty costs which have increased by up to 800% in the last two decades.

Published on: Monday, June 29, 2015 Source Switze Broker

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Removing the Hassle from Sales and Rentals across South East Queensland. Aim to Empower other like minded Property Investors. L J Gilland Real Estate is a prestigious boutique agency specializing in Property Investment Management Services and the Sales of Investment Properties with tenants in place. Comprised of a top performing group of handpicked specialists, our Agents proudly serve Property Investors in Queensland. Since 1996 our Agency has demonstrated a genuine enjoyment of working with people, developing long-term relationships and delivering on the promise of great service. Carlos and Linda Debello offer property investor's the confidence to sell and lease in any market. We provide comprehensive market appraisals, exclusive multimedia marketing campaigns, and knowledgeable, highly personalized counsel on all aspects of real estate. Our Property Management Team is equally considerate, offering investors with in-depth advise, well-researched rental valuations, and highly professional rental management services. http://goanimate.com/movie/0M4bvcZzgIbI?utm_source=linkshare&uid=0u6RGtWsmlVc Carlos’ direct mobiles are 0400 833 800 & 0413560808. Linda’s mobiles are 0409995578 & 0414978700 (prefer email contact for Linda). Office 07 3263 6085. http://www.ljgrealestate.com.au http://www.yellowpages.com.au/qld/aspley/lj-gilland-real-estate-pty-ltd-14091356-listing.html http://au.linkedin.com/in/lindajanedebello http://twitter.com/GillandDebello http://www.facebook.com/pages/ljgrealestate
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