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Stoush continues over negative gearing

Labor has seized upon research presented at a Reserve Bank of Australia workshop to back its case for doing away with negative gearing but the government says the paper is "preliminary and incomplete".

The research paper found eliminating negative gearing would benefit renters and owner-occupiers and raise the number of Australians owning their own homes, Fairfax Media reports.

The change would have a minimum impact on the economy while curbing the appetite of investors and the top 20 per cent of earners for owning multiple properties.

The paper, posted on the RBA's website, is based on economic modelling carried out by Melbourne University's Yunho Cho, Shuyun May Li and Lawrence Uren.

Earlier in the week NSW Premier Gladys Berejiklian was criticised for ignoring advice from her Treasury officials that the federal government should conduct a comprehensive study of negative gearing and capital gains tax arrangements "and consider alternative policies that would improve outcomes for Australians".

Confidential federal Treasury advice published earlier this week contradicted Turnbull government claims that changing negative gearing and the capital gains tax discount would act like a "sledgehammer" on the Australian economy.

NSW opposition treasury spokesman Ryan Park said on Thursday both the NSW and federal governments had misled the community about policies that could address the housing affordability crisis.

Federal Financial Services Minister Kelly O'Dwyer, who labelled the Melbourne University paper "preliminary and incomplete", said Labor can't argue negative gearing and capital gains tax reforms would both make houses more affordable and have no impact on prices.

Shadow treasurer Chris Bowen said the research shows Australian households would be better off.

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