Green Party lays out election terms: Proposed changes to capital gains tax and negative gearing reform
The Greens are pushing for significant changes to negative gearing and the capital gains tax (CGT) discount as a top agenda item in discussions for a minority government.
They believe that these tax adjustments will benefit renters, provide opportunities for first-time home buyers, and mitigate the impact of global trade disruptions.
Negative gearing allows investors to offset losses from rental properties with tax deductions, typically relying on property value appreciation to balance short-term deficits. The CGT discount cuts tax on profits from asset sales held for longer than a year.
Greens Leader Adam Bandt claims that an independent analysis indicates the proposed reforms could assist over 850,000 individuals in achieving homeownership, including many of the 31% of households currently renting.
The party also presents data suggesting that renters would have saved an average of $6,318 if a national rent freeze had been implemented in August 2022, the month the Greens initially proposed it. This equates to $13 billion in collective savings for renters nationwide.
Furthermore, the Greens cite a survey from the previous year showing that half of voters support capping negative gearing, while 70% endorse broader price controls such as rent caps.
Key Policy Changes
The Greens intend to maintain negative gearing and a 50% CGT discount for one existing investment property to safeguard “mum and dad” investors.
However, properties bought after the policy’s introduction, as well as any second or subsequent investment properties already owned, would not qualify for these benefits.
Additionally, the 50% CGT discount would be eliminated for all other assets, with non-housing assets indexed for inflation. These alterations would solely affect investment properties.
“Australia faces a decision: either provide our future generations the same homeownership opportunities as past generations, or continue to offer investors with multiple properties billions in tax breaks. It can’t be both,” stated Max Chandler-Mather MP, the Greens’ housing spokesperson.
Despite these proposals, Ben Philip, an associate professor at the Centre for Social Research at the Australian National University, believes that eliminating negative gearing may not significantly impact housing affordability.
He explains, “Negative gearing is a valid tax deduction, similar to any other investment where a loss is incurred.” Some investors may overvalue negative gearing, potentially leading to a more substantial impact than anticipated by economists.
The Greens’ initiative on negative gearing represents their fourth priority in a minority government, following suggestions to incorporate dental care into Medicare, cease native forest logging, and expand free early childhood education and care.
