The tax change that could allow thousands of new homes, ease rental pressure
Research for the Labor-aligned McKell Institute argues that an increase in the current 50 per cent discount on CGT for new units but a reduction for investors who purchase an existing detached house would encourage construction of additional 130,000 homes before 2030.
NSW could get an extra 40,000 homes while Victoria stands to gain up to 33,600 additional properties in a move that would be a stark departure from Labor's 2019 election policy to heavily curtail CGT concessions.
Albanese and Treasurer Jim Chalmers are heading a three-day economic roundtable next month, when tax reform will be one of the key discussion points.
Labor went to the 2019 election with a policy to halve the capital gains tax concession, which had been introduced by the Howard government in the late 1990s in a move that economists say contributed to a surge in house prices, as part of a proposal to also restrict negative gearing to new properties.
But the McKell research shows a larger concession on new builds combined with reduced incentives for investors to buy existing detached homes would both lift the number of new properties while putting downward pressure on rents.
Report co-author Richard Holden, a respected independent economist, said the 1.2 million target would not be met under current tax settings.
'A key problem with our existing tax settings on property is they orient too much investment toward established dwellings at the cost of new supply,' he said.
'There is nothing wrong with the commonly held desire of everyday investors to secure their future by investing in the housing market. But this desire should be harnessed to achieve our national objectives on housing supply.'
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