Australia's tax overhaul aims to end property as the country's favourite wealth builder
The Australian government has unveiled a tax package that tightens long-standing breaks on residential property investment, the country's preferred wealth-building vehicle for decades. Limits on negative gearing and the capital-gains discount will be put before parliament ahead of the new fiscal year.
Under the package detailed by treasurer Jim Chalmers, negative gearing — which lets investors offset rental losses against other income — will be removed for the third and subsequent properties. The capital-gains discount will fall from 50% to 40%. The government projects an additional A$6.5 billion in annual revenue.
Reserve Bank of Australia board member Andrew Hauser said last month that housing was "one of the most important risks to macrofinancial stability". The average home in Sydney and Melbourne costs roughly 12.4 times median household income, almost double the global average.
Opposition leader Angus Taylor described the reform as "an attack on family wealth". The Productivity Commission has argued it would reduce income inequality. The bill is to reach parliament before the 1 July start of the new fiscal year; the ASX REIT index fell about 1.4% intraday.
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