The government chose to limit negative gearing to new builds, instead of setting a cap of properties an individual could negatively gear, so as not to allow investors to “stack up their debt”, Prime Minister Anthony Albanese has said.
“We very consciously have a policy of new builds, because that’s what drives supply,” Albanese told an economic summit in Sydney.
“If you had negative gearing on two properties, and what people could do, essentially, is stack up, if they had 10 properties, stack up their debt onto the highest one, improve their deductions, and that it would distort the market towards basically the allocation of debt,” he said.
“[That’s] The nature of negative gearing and how it works, so Treasury did modelling of various of these measures. I was determined that for those two reasons, one of stopping a distortion in the market, but secondly, as well, that the measures that we’re putting forward will boost supply, that that is why we chose that model [of new builds] rather than the one or two or five homes,” he said.
Albanese highlighted that One Nation’s policy for negative gearing is capped at two properties.
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