The government has dismissed any immediate possibility of changes to negative gearing. However, it has not completely shut the door, stating that they “keep looking at all policy options all the time.”
Speculation about potential changes surged after reports claimed the government had commissioned the Treasury to model possible adjustments to tax arrangements for investment properties.
When asked if an overhaul of negative gearing or capital gains tax was included in Labor’s housing policy measures, Treasurer Jim Chalmers dodged the question, stating, “We’ve got a housing policy, and that’s not in it.”
Chalmers added that it is not unusual for the Treasury to seek advice from departments on issues in the public domain or under parliamentary discussion.
“Our housing policy is to build more houses for Australians,” he said.
Earlier in the day, Prime Minister Anthony Albanese maintained a similar stance, affirming that they value advice from their public service department.
“From time to time, I’m sure the public service is looking at policy ideas. That’s because we value them,” Albanese said.
Despite being pressed to rule out changes to negative gearing or capital gains tax exemptions, Chalmers and Albanese refrained from providing a definitive answer.
They stated, “What we’re doing is passing the legislation we currently have before the Senate,” referring to Labor’s Help to Buy Bill, a shared equity scheme that was rejected by both the Opposition and Greens.
Albanese did not explicitly confirm whether his government had commissioned the Treasury for advice but mentioned that various departments often propose policy ideas.
“I want a public service that is full of ideas,” he said.
What is Negative Gearing?
According to the Treasurer’s site, negative gearing is an investment strategy, particularly prevalent in Australian real estate, where the costs of owning an investment property exceed the income it generates.In this scenario, investors can claim the loss as a tax deduction, reducing their overall taxable income and, consequently, their tax liability.
This strategy typically relies on the expectation that the property will appreciate in value over time, allowing for a profitable sale despite short-term losses.
However, negative gearing is the subject of ongoing debate. Critics argue that it drives up property prices and primarily benefits wealthier investors, while supporters claim it encourages investment and increases the rental supply in the housing market.
