PM rules out changes to negative gearing

PM rules out changes to negative gearingIn ruling out changes to negative gearing, the Prime Minister provides assurance to millions of average Australian workers whose modest investments contribute to housing supply and rental affordability.His definitive statement provides certainty for the millions of average workers whose modest investments are helping them save for retirement, while also contributing to housing supply and rental affordability.According to Australian Taxation Office statistics, of the almost 1.26 million Australians who declared a net rental loss in the 2012 Financial Year, 883,325 of them earned around $80,000 or less. These average Australian workers can heave a sigh of relief with Prime Minister Tony Abbott confirming that no changes will be made to negative gearing rules.”The data is conclusive – negative gearing in Australia is primarily used by average workers who, in the majority, own only one investment property,” says the Property Council’s Executive Director Residential, Nick Proud.Proud says there is no evidence to suggest that negative gearing drives up house prices – in fact, the opposite is true. “The key to making houses more affordable is to increase the supply of new housing stock to better meet demand,” Proud explains.”New housing supply needs capital to get off the ground, and investors – both foreign and domestic – as well as owner occupiers are a critical source of that capital. Negative gearing unlocks an important source of finance to boost new supply. “The majority of Australians who negatively gear a property – almost 73 per cent – only own one investment property. A further 18 per cent only own two investment properties.”With an ageing population we need to look at ways of taking pressure off the budget. Negative gearing is one way for average workers to save for their retirement. It can also encourage young Australians and first homeowners to take their first step into the property market,” Proud concludes.