Investment property owners across Australia can breathe a momentary sigh of relief after Jim Chalmers doubled down on his vow to not scrap negative gearing.
Addressing concerns that Labor would make changes to investment property tax after switching up its position on stage 3 tax cuts in January, Dr Chalmers insisted that it was not something the government was considering as part of its “multinational tax agenda.”
“No, that’s not something that we’re proposing, not something we are considering, not something that we are working up,” he told Sky News on Sunday.
“We’ve got … a very broad and very ambitious housing agenda and we’ve got a pretty full book when it comes to tax reform and our focus is on legislation that, not just our cost-of-living tax cuts for middle Australia, but also changes to superannuation, tax concessions.”
Dr Chalmers also said that Labor was not considering changing capital gains tax.
Negative gearing is a tax strategy that allows a property investor to buy a rental property using borrowed funds, and then deduct the losses to reduce their own personal income tax bill.
Capital gains tax is the tax on people on profits from selling assets, such as property. If a taxpayer has owned an asset for at least one year, then the capital gains tax is discounted by 50 per cent.
In 2021, about 1.1 million property investors in Australia reported losses of $7.8bn and claimed a tax benefit of $2.7bn, according to the most recent Treasury figures.
About 80 per cent of tax reductions under the negative gearing scheme have gone to those earning above the median income, while 37 per cent were claimed by the country’s highest income earners.
The issue has hit the spotlight after key Senate crossbenchers – Jacqui Lambie, David Pocock and Lidia Thorpe – all confirmed they wanted to see negative gearing put back on the agenda.
“If we want to turn this ship around and have housing as something that everyone in our community can afford, and to not have housing where it’s arguably easier to buy your second house than your first house, then you’ve got to look at the tax system,” Senator Pocock told ABC Radio on Wednesday.
“The capital gains tax discount and negative gearing are things we’re going to have to discuss about.”
It’s widely expected the Greens will hold Labor to ransom on its own Help to Buy housing scheme in a bid to get the government to wind back negative gearing.
Speaking earlier on Sunday, Opposition treasury spokesman Angus Taylor said the Coalition wouldn’t back any changes to property investment tax over concerns it could drive up competition in the housing market.
Despite the Treasurer’s claims Mr Taylor argued that there was “every indication” that Labor was looking at revisiting the policy
“We know they’re considering this. Their answers in the parliament this week were very wishy-washy,” Mr Taylor told ABC’s Insiders on Sunday.