The AGE indicates that the cost to the budget of negative gearing is estimated at close to $12 billion a year. Therefore the government should consider reducing one of the most unduly generous tax concessions.
RBA chief Philip Lowe lent his weight to calls to reduce this distortion of the housing market by partially attributing booming housing price to "the taxation arrangements that apply to investment in residential property in Australia".
The AGE explains that he is referring to the stimulus in demand for investment properties caused by negative gearing and the 50 per cent concession on capital gains tax on investment properties.
The paper says the situation in which the ordinary households subsidise more than 1million, mainly wealthy households that have at least one negatively geared investment property is considered inappropriate.
According to the Treasury and independent researchers, there could be savings currently estimated at $12 billion a year if the tax concession was scrapped.
The AGE says it's also considered unfair because it is pushing first home buyers out of the market.
And it suggests the government should consider reducing one of the most unduly generous tax concessions in the world.
