Negative gearing of property being used for short-term accommodation is costing the Federal Government hundreds of millions of dollars.
New analysis from the Everybody’s Home, a national campaign dedicated to fixing Australia’s housing crisis, found the Federal Budget could be losing between $111 million and $556 million a year in forgone revenue through negative gearing deductions claimed on short-stay rental properties.
Everybody’s Home spokesperson and Anglicare Australia Deputy CEO Maiy Azize said across Australia 167,955 entire homes were estimated to be operating as short-stay accommodation instead of long-term rentals.
Ms Azize said those owners could still claim negative gearing and the Capital Gains Tax (CGT) discount.
She said the Short-Stay Subsidy report found if 10 percent of short-stay rentals were negatively geared, the annual cost to the budget was estimated to exceed $111 million.
“This figure jumps to $556 million in estimated annual lost revenue if half of all short-stay investors claim negative gearing deductions.”
Ms Azize said tax reform on short-stay accommodation had the potential to reclaim billions in revenue over the next decade.
She said renters said they were being affected by the magnitude of short-stay accommodation, including facing soaring rents, evictions, and in some regions, limited long-term rental supply.
“Everyday people are footing the bill for property investors to write off losses from holiday homes, all while families are being priced out of their communities because they can’t find affordable rentals.
“Renters across the country are being squeezed by soaring rents and a shrinking number of affordable homes – and in many parts of the country, short-stay accommodation is only making it worse.”
Ms Azize said generous tax breaks for investors, including for short-stay accommodation, were driving wealth inequality and pushing up house prices for everyone else.
“While governments claim to be serious about the housing crisis, they’re doing little to show it. At a time when government funding for public and community housing is falling far short of need, we shouldn’t be subsidising investments in holiday homes and short-stay rentals.”
Read the full report: Short-Stay Subsidy.
