Negative Gearing

We can create a more equitable housing market by abolishing negative gearing, ensuring that housing is primarily for living in and not treated as a tax shelter for investors. This policy aims to reduce inequality, improve housing affordability, and increase the availability of homes for first-time buyers and families.

1. Abolition of Negative Gearing
   • Negative gearing, the practice where investors can deduct the losses on their rental properties (from maintenance, interest, and depreciation) against their other income (such as salary), will be phased out for all new property purchases from the date the policy is enacted.
   • Existing negatively geared properties will be grandfathered under the current tax rules. However, as properties are sold or transferred, they will no longer be eligible for negative gearing benefits.
   • Properties that are newly constructed and used as rental properties will not be eligible for negative gearing from the time the policy comes into effect.
2. Transition Period
   • A grace period of three years will be provided for investors to adjust to the new policy. During this period, the impact on negatively geared investments will be mitigated to ensure that no one is left unfairly disadvantaged due to the abrupt removal of the system.
   • No new tax claims for negative gearing will be allowed for investments made after the grace period ends.
3. Reinvestment in Housing Affordability Programs
   • Funds saved from the elimination of negative gearing will be reinvested into affordable housing initiatives, including:
     • Development of more public and social housing projects to cater to low and middle-income earners.
     • Policies aimed at reducing housing supply bottlenecks and increasing the availability of affordable rental properties.
4. Enhancing the Tax System to Encourage Sustainable Investment
   
   • Introduction of capital gains tax (CGT) reforms to align more closely with long-term investment strategies. The current 50% CGT discount will be reviewed, and a more progressive system may be introduced to discourage speculative investment.
   • Encourage investment in sustainable housing developments by offering tax incentives for environmentally friendly and energy-efficient properties.
   • Support the rights of renters by implementing national standards for tenant protections, reducing discrimination, and enhancing tenant security.

Promoting Housing for Homebuyers, Not Speculators

Negative gearing has been one of the key drivers behind the housing affordability crisis in Australia. By creating an environment where real estate investors can receive substantial tax breaks, the system has incentivised speculative behaviour rather than increasing the overall housing supply. Eliminating negative gearing shifts the focus back to making housing affordable for Australians who want to live in their homes.

1. Increasing Housing Supply
   • A more balanced and sustainable market will encourage more property development, particularly in the affordable housing space. Without the tax incentives pushing up property prices for speculative investment, developers will be more likely to prioritise the construction of homes for Australians who need them.
2. Reducing Wealth Inequality
   • Negative gearing has disproportionately benefited the wealthy and exacerbated inequality in the housing market. By phasing out negative gearing, we aim to level the playing field and reduce wealth concentration, helping future generations afford their own homes.