It’s one of the Labor party’s signature reforms, but Australians are split on the benefits of reining in negative gearing concessions, a new Ipsos poll finds.
While 43 per cent support the touted policy, another 44 per cent are against changes to negative gearing tax breaks. The remaining 13 per cent don’t know.
Slow down – what is negative gearing?
Negative gearing is a tax situation in which the rental income on an investment property is smaller than the outgoing costs including mortgage repayments. Negative gearing allows the investor to offset that net loss against their income tax bill.
What does Labor plan to do?
The Labor party plans to limit negative gearing concessions to investments in new dwellings. Current negative gearers won’t be affected, with their current concessions to be grandfathered.
They argue this will encourage a greater flow of investment into new dwellings, subsequently lowering the price of entry for first-home buyers. Negative gearing reform is a major component of Labor’s election campaign.
The centre-left party claims the policy would raise $32 billion over ten years.
Unsurprisingly, the Ipsos poll, commissioned by Nine entertainment, revealed Labor voters overwhelmingly support the changes to the controversial tax break.
250,000 affordable rental homes
Labor also unveiled its plan to address housing affordability at its national conference on Sunday.
To address Australia’s housing affordability challenges, property investors would be offered 15-year subsidies of $8,500 per year to build new homes provided they rent them at 20 per cent lower than the rental market price.
This would provide an additional 250,000 affordable homes over the next 10 years, Labor leader Bill Shorten said.
The policy would come at a cost of $6.6 billion over the decade.
“A hidden struggle in this country is being fought by the hundreds of thousands of our fellow Australians who can’t afford to live anywhere near where they work. They’re spending over a third of their pay packet on rent – and plenty more on petrol each day they travel,” Shorten said.
“Rental affordability is a national challenge and it demands national leadership.”
The Australian Housing and Urban Research Institute argues there is currently a shortfall of more than 525,000 affordable rental properties in the country.
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.