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Business View Australia - March-April 2016 135
PERTY DEVELOPMENT
One of the important issues
concerning the property market which
REIA has taken a firm stand on, is that
of ‘negative gearing’. According to the
existing tax laws in the country, if the
owner of a property spends more
on it than he earns, he is entitled
to a tax break. Under this rule, if an
investor spends more on mortgage
interest and maintenance than he
receives in the form of rent, he may
reduce the difference from his other
income, say his salary, and by paying
lower tax, make up for the loss that
he has suffered on the property.
Some experts and the Reserve
Bank of Australia are of the view that
negative gearing is detrimental to the
property market and results in an
inflation of property prices. However,
REIA strongly feels that negative
gearing is a genuine benefit that
must be given to property investors.
ACIL Allen Consulting recently
issued a report on ‘Australian
Housing Investment’, which analysed
negative gearing in all its aspects
and came to the conclusion that it is
not a special concession to property
buyers, but a legitimate deduction
and its withdrawal would cause great
losses to middle income Australians.
REIA has been monitoring the
issue of negative gearing very
closely and it has already star ted a
dialogue with government of ficials
to ensure that this essential