Reforming Negative Gearing

In May 2015, the Australian Greens announced a costed proposal to reform negative gearing and use the proceeds to boost affordable housing supply and provide accommodation for people experiencing homelessness. Read about the Greens plan to reform negative gearing.

The Greens have been proud to lead the debate on genuine taxation reform. Our proposal is to reform the unfair tax laws that have locked entire generations of Australians out of home ownership and affordable, stable rentals.

Negative gearing costs the community at least $4 billion a year.

Why should taxpayers continue to subsidise investment properties when so many people are struggling to afford a home to live in?

Removing this unfair distortion from the tax system is an essential part of the national discussion on tax reform. 

Read our Negative Gearing Factsheet and Initiative

The biggest winners from negative gearing are the nation's highest income earners. Over half of individual taxpayers with negatively geared rental housing investments are in the top 10% of personal taxpayers, with 30% earning over $500,000. The tax benefit of negative gearing is 10 times more for the highest income earners than for the lowest.

We propose to deliver billions in budget savings from reform of negative gearing, that should be used, in part, for new affordable housing for thousands of families and individuals stranded on social housing waiting lists and experiencing homelessness.

Our proposal is based on models outlined in consecutive reports by a wide range of advocates and economists.

The Parliamentary Budget Office (PBO) has provided costing for removing negative gearing for all non-business asset classes, for assets purchased on or after 1 July 2015, with grandfathering arrangements for existing investments.  The PBO estimated this proposal would increase revenue by $2.9 billion over the 2014-15 forward estimates, and $42.5 billion over the next decade.

 

Bust the myths about negative gearing

  1. Moody's estimated negative gearing is increasing house prices by 9% - or about $44,000 - nationwide. At its peak in 2008, negative gearing added 15% to house prices.
  2. Negative gearing does little to boost housing supply. In June 2013, only 5% of housing investment loans went toward construction of new dwellings.
  3. There are 1.29 million Australians claiming negative gearing, but almost 4.8 million Australian renters. Many are potential first home buyers trying to save a deposit who must compete with investors. 
  4. Data from 1985-1987 shows beyond doubt that rents did not jump when negative gearing was temporarily removed. In fact rents fell across Melbourne, Brisbane, Adelaide, Hobart, and Canberra.
  5. Investors tend to realise their investment rather than provide a long term, stable housing which impacts terribly on tenants. 25% of tenancies are terminated in the first year due to a sale, and negatively geared investors are twice as likely to sell within 12 months.
  6. If investors sold their properties because negative gearing is removed, homes would be sold to renters - reducing the demand for rental properties and making no net difference to the balance of rental properties and therefore rents unchanged.
  7. Negative gearing advocates use deceptive figures like 'taxable income'; the income calculated after deductions are applied - they actually have higher incomes than quoted. 
  8. The more appropriate measure to use is total income. Only 12% of people earning a total income of $50,000-$100,000 (or 478,595 Australians) claim negative gearing benefits.
  9. 30% of negative gearing beneficiaries earn over $500,000 a year - 55% are in the top 10% earners. 
  10. If negative gearing was removed, 90% of people earning $80,000 or less would be unaffected.
  11. Negative gearing is one of Australia's largest and most inequitable tax expenditures. It is used more by people in higher income brackets and the 'losses' claimed are greater as their income increases. People with higher incomes are also more likely to borrow more and claim more. 
  12. Up to 1.5 million Australians are living in entrenched, long-term poverty. Removing negative gearing would free up almost $3b over the next four years, and $42 billion over ten years to spend on affordable housing and other measures to alleviate poverty. 

Latest on Reforming Negative Gearing

media-releases

Budget abandons housing affordability

04 May 2016

The 2016 budget entrenches government hostility to renters and those on low incomes trying to get into the housing market, the Australian Greens said today.

media-releases

Government loses the plot on housing affordability: Greens

02 May 2016

The government's stubborn refusal to act on yet another substantial piece of evidence that negative gearing is forcing people out of the housing market shows just how divorced from reality they are, the Australian Greens said today.

media-releases

Slow clap for Turnbull's non-announcement to keep negative gearing

24 Apr 2016

Turnbull government has made housing affordability a pivotal election issue and the Greens will continue to fight to phase out negative gearing.

media-releases

So which tax scare campaign is it?

29 Feb 2016

Today the Australian Senate called on the government to clarify which of their contradictory scare campaigns they plan on proceeding with.

motions

Which Housing Scare Campaign?

29 Feb 2016

The Assistant Treasurer said that reforming negative gearing and capital gains tax concessions would force up house prices.

The Prime Minister said that reforming negative gearing and capital gains tax concessions would force down house prices.

View all