The Negative Gearing Debate

What is the government going to do about the Budget Deficit? Raise taxes, increase the GST, change policy?

Currently 1.2 million people negatively gear property and most of these people are middle class Australians. The Australian Taxation Office shows that the value of negatively geared tax breaks claimed by investors is around $13 billion, with the average loss per negatively geared investor being in excess of $11,000. This loss doubles for those earning more than $180,000 – to more than $24,000.

Previous governments have ‘huffed and puffed’ but never blown the house down when it comes to policy change in this area. However, governments also realise that anything done in this area will be highly unpopular amongst middle class Australian voters who will be the vast majority of people affected.

The government may not really know how these changes will impact the property market, so their attitude in the past has been to leave it alone. But, this Malcolm Turnbull led government facing a Budget Deficit blowout expressed the need to review the negative gearing policy and may have little choice but to tinker with negative gearing in 2016.


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