Housing-industry body concerned about possible tax-break changes in budget
Shire development
The housing-construction industry is “on edge” ahead of the May 12 federal budget because the government has not ruled out changes to capital-gains tax and negative gearing, Housing Industry Association managing director Jocelyn Martin says.
“Last year, around 40 per cent of new dwellings were financed by investors, so now is not the time to create uncertainty for this part of the market,” Ms Martin said.
“Punishing investors does not make it easier for young people to buy a new home, nor will it improve the budget position.”
Ms Martin said neither Prime Minister Anthony Albanese or Treasurer Jim Chalmers had ruled out changes to capital gains and negative gearing.
“The equation is simple - if you tax more of something, you get less of it.
“The only sustainable solution is to build more homes.”
But a range of other groups such as charities and industry analysts are urging changes to the laws to help tackle Australia’s housing-affordability crisis.
A Federal Senate inquiry looking at the 50 per cent capital gains tax discount introduced by the Howard Government in 1999 handed down a report last month, finding the tax break distorts investment decisions, skews home ownership towards investors and affects wealth inequality.
In the past five years since Covid-19 in particular, average house prices across Australia, including in Douglas Shire, have been surging, causing many buyers to be priced out of the market.
A recent poll of more than 4000 people by charity organisation Amplify found 65 per cent of participants supported changes to the CGT discount and negative gearing.
According to the Federal Government, a property is said to be “negatively geared” if it is bought with debt and the rental income is less than the cost of owning the investment.
An investor can then apply their net loss against their other income and reduce the taxable income.
In terms of CGT, the income tax law treats capital gains as a form of income, but individuals usually receive a 50 per cent discount realised on assets owned for at least a year.
