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Negative gearing protects the vulnerable

By Elyse Perrau
9

Abolishing negative gearing would hit the most vulnerable in society the hardest and put further pressure on the housing market, a real estate chief has argued. 

Ray Ellis, First National Real Estate's chief executive, said suggestions negative gearing is a “perk for the rich” are “misguided”.

“The current taxation arrangements offer Australians the opportunity to invest in real estate as a way of saving for independence in retirement,” he said.

“However, with the average property investor owning just one rental property and having an income no higher than $80,000, suggestions that the rich are exploiting negative gearing are an exaggeration.”

Mr Ellis said if it was eliminated in the next Budget, the most vulnerable in Australia could soon see unaffordable rental prices.

“The great Australian dream is to own your own home and it is important we remember just about every Australian begins his or her journey to property ownership as a tenant in a rental property,” he said.

“If negative gearing were removed in an environment of the lowest interest rates since the 1950s, Australians would be unlikely to continue to invest in rental properties at current rates.”

Mr Ellis said investors would then seek better returns elsewhere and, with population growth near record highs, the supply of rental properties would fall short of demand, thereby forcing up rents.

“This would place unacceptable pressure on the most vulnerable citizens in our community,” he said.

“It would also lengthen the amount of time it takes for first home buyers who are renting to save a deposit to buy their first home.”

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