A proposal put forward by The Greens would see negative gearing scrapped and the increased tax revenue used to build affordable housing, but Positive Real Estate chief executive officer Sam Saggers believes the plan is just the latest in a long line of ideas that have never got off the ground.
“Ever since negative gearing was introduced people have been talking about things like this, this is nothing new compared to what we’ve been hearing for the last 20 years,” Saggers said.
“I don’t have a crystal ball, but I don’t think the government is going to do anything at all to it.”
While some people believe investors are using negative gearing to avoid paying their fair share of tax, Saggers says the system isn’t a huge benefit to every investor.
“The people who are getting the real benefit out of negative gearing are the investors who have five, six or seven or more properties and I think the ABS had statistics that there’s only about 15,000 of them in Australia,” he said.
“Most people own their own home and one investment property if they’re lucky and negative gearing might save them $4,000 or $5,000 a year.”
According to costings from the independent Parliamentary Budget Office, The Greens' policy would save the government $2.9 billion by 2020 and $42.5 billion over 10 years.
Part of that money would then be used for to build housing for the homeless or those on public housing waiting lists.
While The Greens argue getting rid of negative gearing would allow for the construction of affordable housing, others believe it will make finding somewhere to live harder for low income earners.
The Real Estate Institute of Queensland believes the plan will turn investors off housing and result in housing stocks dwindling, something Saggers agrees with.
“If you remove it you make property a less attractive asset class for investors and if you remove them housing stock will dwindle and rents are going to rise.
“The thing that needs to be thrown into the conversation about negative gearing is that there are a lot of taxes around property in Australia.
“In New Zealand you don’t have to pay stamp duty, which is a tax and then if you sell your house you’re hit with capital gains tax so the government does get its fair share of revenue from taxes on property.”
