The Property Council of Australia (PCA) and the Real Estate Institute of Australia (REIA) recently commissioned a report “Australian Housing Investment: Analysis of negative gearing and CGT discount for residential property”. A PCA article cites the report to argue that negative gearing and capital gains tax discounts (CGT) for property investors are good for the country, countering recent criticism of these measures contributing to house price inflation. PCA also advocates for the same measure as the correct approach to investment and savings tax treatments and points to a number of “myths” about negative gearing and CGT. In this article, National Shelter challenges the PCA statements, encouraging readers to look at the bigger picture.
Recent public criticisms of negative gearing and CGT include claims that both measures are:
- Too generous for high income earners;
- Contributing to house price inflation by fueling demand without a commensurate supply strategy;
- Not the most productive application of housing investment; and
- Not adding to new builds because most investors purchase existing rather than new housing.