The effect of negative gearing and capital gains tax reform on home ownership

The article investigates the home ownership effects of abolishing deductions for negative gearing losses and halving the capital gains tax discount under Australian income tax laws. Home ownership evolves according to the balance of annual purchases and sales by owner‐occupiers and investors. This t...

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Bibliographic Details
Published in:Australian economic papers 2024-09, Vol.63 (3), p.427-448
Main Author: Warlters, Michael
Format: Article
Language:English
Subjects:
Affordable housing
Capital gains
Economic reform
holding periods
Home ownership
housing
Housing policy
Income taxes
investment properties
Investor behavior
Ownership
owner‐occupiers
Sales
Tax reform
Taxation
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Summary:The article investigates the home ownership effects of abolishing deductions for negative gearing losses and halving the capital gains tax discount under Australian income tax laws. Home ownership evolves according to the balance of annual purchases and sales by owner‐occupiers and investors. This transaction‐based perspective on home ownership implies an important role for average holding periods, which determine the share of established homes sold each year. The tax change is estimated to increase the owner‐occupied share of the private dwelling stock by 4.7%, of which 2.1 percentage points are attributable to shorter investor holding periods.
ISSN:0004-900X
1467-8454
DOI:10.1111/1467-8454.12335