Housing affordability, prescription stamp duty, buy negative gearing and capital gains tax are all on the agenda in the Real Estate Institute of Australia’s pre-budget submission to the Federal Government.

The submission notes that as Australia’s economy transitions from resource investment growth to other drivers of growth and economic activity, dwelling investment has been a significant contributor to Australia’s economic growth.

REIA President Neville Sanders said while the building sector had been a strong contributor to economic growth, this has been at the cost of first home buyers.

“Since April 2012, the numbers of home loans issued to home buyers increased by 25 per cent while the participation of first home buyers declined by 17 per cent. This decline is despite seven cuts in the official interest rate over that period.

“This is why we are asking the Federal Government take a leadership role in urging all states and territories to take the same approach to the provision of assistance to first home buyers regardless of whether the dwelling is new or established as well as allowing first home buyers access to their superannuation for the purchase of a home,” Mr Sanders said.

The submission also asks the Federal Government take a leadership role in abolishing state based stamp duties.

“Analysis shows that economic activity in Australia can be lifted by just shifting the composition of taxes from high economic cost state taxes to Australia-wide taxes,” Mr Sanders said.

REIA is also urging the Government to retain negative gearing and capital gains tax in its current form for the purpose of property investment.

“The current taxation arrangements provide many Australians with the opportunity to invest in property and augment their savings, in particular their retirement savings, and at the same time improve rental affordability through an increased supply of rental housing,” Mr Sanders said.

“Negative gearing is not a special concession for property, it is a legitimate deduction of expenses in the course of earning income from investments in all asset classes until the investment generates a positive income stream in the future.”

“Limiting negative gearing to a maximum number of properties per tax payer – as has been suggested by many commentators – would be bad policy as it would encourage inefficient capital allocation by investors,” Mr Sanders said.

Source: REIWA

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