Negative gearing will stay: Federal Treasurer

Date: 10th August 2010

The Federal Government has declared its support for negative gearing for property investors.

The Government ruled out the abolition of negative gearing at yesterday’s debate at the National Press Club in Canberra between Federal Treasurer Wayne Swan and his Opposition counterpart Joe Hockey. The Opposition also indicated it would continue to support negative gearing.

“This is fantastic news for renters, affordable housing and real estate investors,” says David Airey, president of the Real Estate Institute of Australia.

“The Hawke Government abolished negative gearing for property in 1985 only to have it reinstated in 1987. During that period rents increased 57% in Sydney, by 38% in Perth and by 32% in Brisbane. At the same time building approvals fell 14%.

“When negative gearing was reinstated, the Government noted that any tax advantages conferred by negative gearing were countered by the CGT regime when capital gains were realised.

“To amend the current negative gearing provisions for housing, as some critics have suggested, would be treating real estate differently to other asset classes and create a resource mis-allocation.”

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