Negative Gearing

The REIA supports the retention of negative gearing on residential property to: promote self-funded retirement; provide rental property for tenants; and benefit socio-economic development of the nation.

• Gearing enables people to borrow money to undertake investment opportunities that would otherwise have been beyond their reach financially.
• People cannot simply “save” for retirement. They need assistance for wealth-creation towards self-funded retirement in order to reduce the liability on government and taxpayers.
• Who are the main users of negative gearing?
  - 72.1% earn taxable income up to $63,000 pa and claim 63.7% of losses
  - Only 11% earn taxable income $95,001 pa or more
  
• The net non-taxable loss on rental property to the Commonwealth in 2005/06 was $3.5 billion. However, directly related property revenue received by all three levels of Government (Commonwealth, State, Local) exceeded $35.1 billion.
• Property investors provide rental accommodation. There have been calls to either abolish or substantially modify negative gearing. This was tried in 1985 with disastrous consequences for the property market and people trying to rent. Rents rose 37% across Australia and by 57% in Sydney. Negative gearing was reintroduced in 1987.

To read the REIA policy statement on negative gearing, click here.

For further information contact the REIA Secretariat