Possible changes to negative gearing remain hypothetical, the treasurer says, despite rumblings the federal government is seeking advice on curbing the tax breaks.
Labor has sought advice from Treasury on scaling back negative gearing and capital gains tax concessions as it looks to make a breakthrough on housing, Nine newspapers reported on Wednesday.
Changes to negative gearing would be grandfathered and won’t impact investors currently using the scheme.
But Treasurer Jim Chalmers downplayed the speculation, saying the government was committed to boosting housing supply.
“I’m not going to engage in hypothetical impacts of hypothetical policies when we already got a housing policy,” he told reporters in Brisbane.
“Treasury looks at all kinds of different policies from time to time, it is not unusual for us to get advice from departments on issues that have been speculated about in the public or the parliament.”
Negative gearing allows housing investors to claim deductions on losses from an investment property, while the capital gains tax discount halves the amount of tax paid by people who sell homes they have been owned for 12 months or more.
Labor, under then-leader Bill Shorten, took phased changes to negative gearing to the 2019 federal election to limit its use to new investment properties.
Investors who had bought properties before a cut-off date would have been exempt.
However, a party-led review of Labor’s election loss in 2019 found the negative gearing plan had exposed the party to coalition attacks that it would put the budget and economy at risk and hurt mum and dad investors.
Prime Minister Anthony Albanese brushed off the claims the government was re-examining negative gearing changes, but didn’t rule it out.
“I’m sure the public service are looking at policy ideas, that’s because we value them,” he told reporters in Tasmania.
“But we have our housing policy, it’s out there for all to see.
“Our government is fixing housing supply by getting our legislation through the Senate.”
It comes as Labor has been locked in a stalemate with the Greens on legislating its housing policy, which would allow homebuyers to buy a property with a smaller deposit.
The Greens want the government to commit to a cap on rent increases and phase out negative gearing.
Greens leader Adam Bandt said the suggestions the government was examining changes on the tax concessions showed political pressure on housing was working.
“Labor said it (negative gearing changes were) impossible. Now they admit it’s possible. They must commit to doing it,” he said.
“These unfair tax handouts are driving the rental and housing crisis. They help wealthy property investors buying their seventh property and hurt renters trying to buy their first home.”
Opposition finance spokeswoman Jane Hume said re-examining negative gearing breached trust with voters.
“There’s nothing wrong with the government considering anything. But lying to the Australian people about whether they’re considering it is another issue entirely,” she told ABC TV.
Property Council of Australia chief executive Mike Zorbas said changes to negative gearing would not adequately address housing concerns.
“We have a huge housing gap across Australia and when modelled negative gearing changes widen that gap,” he said.
“Previous Deloitte modelling shows negative gearing changes shrink the number of new homes by about four per cent and, according to previous work by the Grattan Institute, only reduce house prices by two per cent.”
