Negative gearing benefits wealthy

April 28, 2016
Issue 

Dire warnings from the federal government that property prices will fall and rents will soar if negative gearing and capital gains tax discounts are reduced have been found to be untrue by a Grattan Institute report.

It also found the government's claim that “mum and dad investors” were its biggest beneficiaries was untrue.

In fact it found that negative gearing largely benefited the wealthy, with the top 10% of income earners getting almost half of the tax benefits before rental deductions.

Dire warnings from the federal government that property prices will fall and rents will soar if negative gearing and capital gains tax discounts are reduced have been found to be untrue by a Grattan Institute report.

It also found the government's claim that “mum and dad investors” were its biggest beneficiaries was untrue.

In fact it found that negative gearing largely benefited the wealthy, with the top 10% of income earners getting almost half of the tax benefits before rental deductions.

The report said the government could raise $5.3 billion a year, with little effect on house prices or housing supply, if it reduced the excesses in the system.

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