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Business View Australia - September 2015 23

serve as a bridge between builders

and property buyers. The annual

contribution of property to the nation’s

economy stands at $300 billion.

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

REAL ESTATE