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The REIA has asked the federal government to maintain negative gearing on property investments in its current form, which allows some investors to claim their interest repayments as a tax break.
With housing affordability concerns on the rise, the Real Estate Institute of Australia has asked the government to retain negative gearing and capital gains tax on property investments in their current form.
“Until a co-ordinated and holistic review has objectively addressed all property taxes, negative gearing should remain as a legitimate deduction of expenses,” the REIA said in its submission to the government.
This request is part of the institute’s list of 12 priorities ahead of the May 2021 budget, aimed to assist Australia’s property customers in succeeding in a COVID-normal Australia.
REIA president Adrian Kelly said that over 80 per cent of agents surveyed in 2020 believed that ongoing solutions would be needed, such as extended JobKeeper and rental support for Australians impacted by sectors unable to recover.
“We’re also proposing interest rates for first home buyers be made tax deductible,” Mr Kelly said.
“[The] REIA estimates this would provide a benefit of around $4,000 per annum to Australia’s first home buyers (which NHFIC places at around 15 per cent of the housing spectrum). At least six other OECD nations have a similar incentive.
“We are calling on allowing voluntary super contributions and earnings be used and accessed for all first home buyers as well as expanding the First Home Loan Deposit Scheme (FHLDS) into a long-term program.”
The REIA is also proposing the introduction of a predictive tool to help real estate agents manage their cash flow, including sizeable donations.
“Assistance from $2,000 to $5,000 per agency will allow for the individual advice from a trusted adviser to improve financial viability and productivity which will assist in the government achieving a higher economic growth rate than would otherwise be the case,” Mr Kelly said.
Mr Kelly concluded that there is a need for policies and investments that will continue to drive growth in the property.
“Wherever you are in the housing market — an agent, tenant, buyer, investor or vendor — there should be support for you in the next federal budget to have confidence to succeed in a COVID-normal Australia.”
Negative gearing occurs when the rental income of a property is not enough to cover the total costs of managing the rental and re-paying the interest portion of the loan.