Negative Gearing-Labour's policy misses the mark

According to the real estate industry, Labor’s negative gearing and capital gains tax policy favours high income families and does nothing to curb what it sees as the excesses.

“The proposal is that losses from new investments in shares and existing properties can still be used to offset investment income tax liabilities and that these losses can also continue to be

carried forward to offset the final capital gain on the investment”, explained Mr Sanders, President of the Real Estate of Australia.

“The irony is that this policy actually favours the wealthy, who will have other investment income to offset against negative gearing losses. While nurses, school teachers, electricians and office managers who make up over half of the top 10 occupations using negative gearing will generally only have salary and wages income and thus not be able to offset the losses.”

“It proposes to slug the mum and dad investors with one property saving for their retirement whilst the wealthy with a large and diversified portfolio will remain unaffected.”

“When it comes to capital gains tax collections a little more than 40% comes from real estate investments by individuals from residential and other real estate. Nearly 30% comes from shares and another 30% from other assets.”

“It needs to be remembered that the availability of negative gearing highlights the equity of the Australian taxation system and has provided many on lower incomes with the opportunity to invest in property which they otherwise would not have had.”

“Negative gearing provides ordinary individual taxpayers, compared to high-income taxpayers, with the opportunity to invest in property. By allowing taxation deductions for the losses, access to negative gearing lowers the cost of investment for all investors. This benefit is of particular benefit to those investors who have less resources and capacity to carry real cash losses for several years”, concluded Mr Sanders.

For more information on how negative gearing affects everyone go to