Written

For

The

Australian

-

How

renters

can

use

CGT

and

negative

gearing

to

their

advantage

What if the very tax settings the Greens want to scrap are actually helping some renters buy their first home?

That's the counterintuitive angle I've been exploring as Treasurer Jim Chalmers reopens the Pandora's box of capital gains tax concessions and negative gearing. The Greens are pushing hard, with Max Chandler-Mather and Adam Bandt painting property investors as wealthy hoarders accumulating houses "like socks on the floor of a teenager's bedroom."

The data tells a different story. ABS figures show 71.5 per cent of investment property owners own just one property, and only 0.5 per cent own seven or more. Negative gearing is overwhelmingly a mum-and-dad strategy, not a plaything of the rich.

Here's the twist that seems to get lost in the political noise: astute renters are actually using negative gearing and CGT concessions as a stepping stone into home ownership. Priced out of Sydney or Melbourne? Buy an investment property in Perth or Adelaide, claim the tax deductions along the way, then sell later at the 50 per cent CGT discount. Someone who did this four or five years ago in Perth (up over 60 per cent) or Adelaide is now hundreds of thousands ahead and well-placed to buy in their home city.

Of course, it's not risk-free. Pick Darwin, where prices have crawled up just 10 per cent since 2020, and the strategy stalls. There are also the "rentvestors" — long-term renters happily building wealth through investment properties — who'd be squarely hit by any changes.

Rather than tinkering with tax settings, I'd point to Singapore, where the Housing Development Board lifted home ownership from 9 per cent to 90 per cent by actually building affordable housing.

And let's be honest — after the stage 3 tax cuts were carved in half despite "no plans to change" assurances, higher income earners have every reason to be sceptical about what comes next.