Tax discounts for property investors will cost the Australian budget just under $39 billion in forgone tax revenue this financial year, according to analysis by the Parliamentary Budget Office, almost 80 times more than the government is planning to spend on building homes through the HAFF.
Amid Labor refusing to offer more funding for public and affordable housing and take action on renters, the Greens say the data shows the government is doing far more for property investors than they are for renters or those struggling to afford their first home.
As part of the Housing Australia Future Fund negotiations the Greens have called on the government to invest $2.5 billion dollars per year in public and genuinely affordable housing and $1 billion to incentivise the states and territories to implement a freeze on rental increases.
PBO modelling shows that the cost of property tax deductions (which includes interest costs, council rates, land tax etc) and the Capital Gains Tax discount to investment properties (where only 50% of the capital gain from the sale of the property is subject to income tax) will cost the federal budget $38.9 billion in forgone revenue in the 2023-24 financial year. This figure will increase every year and cost the federal budget $523.9 billion over the next decade.
With this forgone revenue, the government could fund the construction of up to 102,500 new public homes this year, or over 1 million homes over the decade on public land.
The Greens are not proposing the abolition of all of these concessions, but are using the figure to demonstrate the asymmetry between Labor’s small contribution towards housing, and their support for property investors.
The Greens policy is to:
- Immediately abolish the 50% capital gains discount for individuals for assets held for more than 12 months
- Phase out the deductibility for all investment property interest expenses against personal income for individuals with more than one investment property purchased before 1 July 2023 over a 5-year period
Lines attributable to Australian Greens Housing spokesperson, Max Chandler-Mather MP:
“It’s morally reprehensible that while millions struggle to keep a roof over their heads, Labor are willing to lock in half a trillion dollars worth of tax concessions for property investors, give renters nothing, and only $500 million at most for social housing.
“$39 billion is 78 times more than the maximum amount Labor is offering to spend on social and affordable housing via the HAFF, and speaks volumes about how little Labor cares about tackling the housing crisis.
“If Labor spent as much on public housing as they are on tax breaks for property investors Australia could build over 100,000 public homes a year and tackle the housing crisis within a decade.
“These tax breaks are turbo charging the housing crisis, making it easier for an investor to buy their 10th property, driving up property prices and depriving the government of revenue that could be put to work building housing for those who need it.
“It is an indictment on Labor’s priorities that they think that $39 billion on tax breaks for property investors is a reasonable investment, but $2.5 billion for public and affordable housing and $1 billion for a rent freeze is somehow an unaffordable extravagance.
“We should be phasing out negative gearing for more than one investment property and scrapping the capital gains tax concession; and prioritising building new public, social and affordable housing, and incentivising the states to make unlimited rent increases illegal.”