No, Negative Gearing is Not to Blame
For the past few years, negative gearing has received a lot of criticism, especially with the rising prices in some property markets. But now it seems that it’s time to lay those dissenting opinions to rest. A new report finds that negative gearing is not the key culprit influencing shifts in housing prices.
Not the culprit
According to Mythbusting tax reforms by Deloitte Access Economics, negative gearing does not have a direct or major impact on housing prices. The report explains that supply is the primary factor and at the moment a boost in supply is helping ease prices in Sydney and Melbourne.
“We have seen a distinct shift in the hot property markets of Melbourne and Sydney in recent weeks. This wasn’t due to any changes in tax policy, it is a result of new housing supply coming into the market and finally taking the pressure off prices,” Property Council of Australia CEO Ken Morrison said in an article in Mortgage Business.
(Read more — Negative Gearing: Why It Should Not Be Scrapped)
“As the report shows, pointing to negative gearing as the primary driver for higher house prices is wrong,” Morrison said.
Who benefits from it?
Another prevalent claim against negative gearing is that it only caters to the rich. With it in place, some argue that the rich can avoid paying taxes and inadvertently preventing everyday Aussies and first-time home buyers from entering the market.
This is not the case however, as analysis show those who benefit from negative gearing the most are those who earn around $80,000 a year. While it’s not anywhere near poverty level, earning $80,000 a year doesn’t make one wealthy either. These people are your everyday Australians who only want to have a comfortable future.
“Negative gearing is not a tax lurk for the wealthy – it’s a legitimate and long-standing part of the tax system used predominantly by the regular folk who are looking to get ahead,” Morrison said.
JDL Strategies has always fought for the rights of Mum-and-Dad investors who are struggling to achieve financial security during their retirement years. So, we welcome this news and stand behind our belief that negative gearing should not be removed. When used in a comprehensive property investment strategy, it can help you build a smart property portfolio, and ultimately, secure your financial future. That in turn eases pressure on government because they are not burdened with caring for those who cannot afford to fund their own retirement.
The JDL Strategies team are at hand to guide you in making effective property investment decisions. Talk to us to learn more how we can help you create a better future.