How many of Australia’s 2.2 million property investors would lose out under a new plan to curb negative gearing?
The Australian Council of Trade Unions is pushing to limit negative gearing and capital gains tax discounts to just one investment property.
So who stands to win or lose the most if it happens? And is the Albanese government likely to act on the proposal, given Labor has been burnt on the issue before?
My research on Australian housing finance shows negative gearing and capital gains tax discounts were not designed with rental housing in mind – yet this is where they’ve had their greatest impact.
Under current negative gearing rules, investors are able to deduct losses incurred from an investment property (such as interest payments and other expenses) against their own taxable income. These can be claimed on an unlimited number of investment properties.
High-income earners tend to have greater incomes to buy properties, and larger tax bills to make deductions against.
With the 50% capital gains tax discount, only half the increase in price of an asset is taxed when it is sold. High-income earners also tend to benefit more from this than low-income earners.
Under the ACTU’s proposal, the current negative gearing and capital gains tax discount arrangements would stay the same for the next five years.
That would give investors time to adjust their property portfolios before a change to only getting tax breaks on a single investment property.
ACTU Secretary Sally McManus is putting forward the idea at this month’s national economic reform roundtable. She warns continuing to give investors tax discounts to own multiple properties is........
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