The Federal Government’s tax summit kicks off in Canberra this week, but a failure to address the tax incentives that drive up house prices will condemn future generations to high housing costs and financial insecurity.
The top issue at the tax summit ought to be the issue of tax deductibility of housing investment losses and the inflationary impacts that tax loopholes have on the housing market.
The system is fundamentally flawed and must be addressed to remove the loopholes that allow investors to dodge their tax liabilities, encourage speculation and distort the housing market.
Many people desperate to buy their first home will know the feeling of being outbid by wealthy investors. They might not know that the tax system is to blame.
Australian Tax Office statistics confirm that after receiving $24 billion in rental income landlords ended up claiming a massive $30 billion in losses, allowing them to write off $6.5 billion of their taxes.
The Henry Review made some sound recommendations, and we have a real opportunity to make housing more affordable through tax reform.
Since capital gains tax exemptions were introduced in 1999 housing investors have rushed to invest in established housing rather than new construction. Not only do these tax breaks’ drive up house prices, they do little to add to the supply of affordable housing we desperately need.
But unless we address the tax loopholes that inflate house prices, we will see future generations locked out of home ownership, and household budgets squeezed by rising rents.
We would like to see tax deductibility on housing investments, stamp duty and land tax on the table at the tax summit, to ensure we are fully canvassing the options to make housing more affordable in Australia
– Sarah Toohey
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