Should negative gearing be blamed for house price inflation in Australia?

Tax Watch convenor Julian Disney says negative gearing should be blamed for house price inflation in Australia.

“I think one of the major causes of the house price inflation is the tax system,” he said, referring to negative gearing that allows investors to write off the costs of their interest payments and the concessional capital gains tax.

“But also the total exemption of principle residences or the family home, as they’re sometimes called, from capital gains tax, land tax, pension assets test.

“I wouldn’t argue for them to be fully removed, but what they’ve done is to aggravate house price inflation by sucking people into paying more for their housing because of the tax advantages.

“And we’d do better, for example, to drop stamp duty and help people to get in but then tax them more later.”

I think what Disney suggested are:

1. Get rid of negative gearing and capital gains tax concession on investment home

2. Put a tax on the family home

3. Induce Australians to buy home and then charge them more tax

Does anyone think these suggestions are good for normal Australians? I am not so sure. What I am sure is that any government puts these suggestions into practice will lose the nest election for sure.

One Reply to “Should negative gearing be blamed for house price inflation in Australia?”

  1. Dr Disney for Treasurer I say.
    Good ideas all –
    1. get rid of negative gearing on secondhand homes
    2. land tax on all property (encourage landbankers to actually sell or build something – therefore good for builders/developers)
    3. if negative gearing is gone, then average tax paid other Aussies might be dropped as about $6B is now poured into the trough of tax write-offs

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