Property investors can deduct rental losses from their taxable incomes. Photo: Attila Csaszar

Negative gearing changes could raise $1.7bn

Modelling by the Curtin University’s Australian Housing and Urban Research Institute has proposed a capped rental deduction for investors using negative gearing, arguing it will be a a budget saver that will have minimal impact on the less well off.


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Kalamunda WA
Some of the statistical analysis in this area seems flawed. There has been much published by several research organisations relating to the percentage of investment properties owned by Australians using the total population as the denominator. It is fairly pointless to use statistics in this manner as a large proportion of the population can't own investment properties (children for example). The return on investment property without taxation concession is pretty low for most areas (<3.4%). The majority of 'mum and dad' investors are people on incomes where the taxation offset of negative gearing is the main reason they invested. Remove the concession and it will no longer be feasible for them to hold the investment. While the AHURI does not publish the nature of their model, it is probably not very accurate (like most of the others I have seen). Selling investment properties on mass into a market devoid of investors means these houses will have to be picked up by traditional renters or first home buyers, or potentially sold at a loss. The model in regard to these factors will be heavily reliant on assumptions that cannot be empirically benchmarked. Capital losses under this scenario can be offset against capital gains reducing taxation benefits, which is another potential area of error in the model.

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