Welcome to The Real Estate Institute of Australia
The Real Estate Institute of Australia (REIA) is the national professional association for Australia’s real estate sector. REIA is a politically non-aligned organisation that provides research and well-informed advice to the Federal Government, Opposition, professional members of the real estate sector, media and the public on a range of issues affecting the property market.
Debunking the negative gearing myths
With the aim of bringing some objectivity and robust analysis to the debate on negative gearing the Real Estate Institute of Australia (REIA), together with the Property Council of Australia, engaged economic consultants ACIL Allen Consulting to undertake an economic assessment on the impact of any change to the current arrangements for negative gearing and the CGT treatment of property investment.
The first thing to note is that negative gearing is not a special concession for property. It is a legitimate deduction of expenses in the course of earning income from investments in all asset classes (including shares, other investments and business ventures) until the investment generates a positive income stream in the future.
Similarly the 50 per cent discount on capital gains replaces the previous indexation of capital gains which was put in place to ensure that only real capital gains are taxed – the change being made for administrative ease – and is also applicable to all asset classes.
Dispelling the myths that have gained currency, the ACIL report shows that:
- negative gearing and the capital gains arrangements are helping to boost the supply of new homes, put downward pressure on prices, keep rents lower and give ordinary Australians a better chance of entering the property market which in many cases supplements savings for retirement purposes
- the provision of negative gearing in conjunction with the CGT arrangements promotes investment in rental properties and increases the supply of new housing
- an increase in rental supply means higher rental vacancies and lower rents than would otherwise be the case.
- negative gearing provides all individuals with an opportunity to invest in property, not just those in higher income brackets. Seven out of ten property investors who benefit from negative gearing earn a taxable income of less than $80,001 a year
- property is not the investment class that benefits the most from the CGT arrangements. The majority (around 60 per cent) of the capital gains are sourced from shares.
REIA 2016 National Awards for Excellence
Winners of the REIA 2016 National Awards for Excellence were announced last night. The venue was Crown Melbourne and the awards were hosted by the Real Estate Institute of Victoria. They are designed to encourage, recognise and promote excellence and best practice in the profession. Find WINNERS HERE and FINALISTS HERE.
The economic circumstances now are not greatly different to what they were when the 2015-16 Budget was delivered: growth is still below trend; unemployment threatens to increase; and business and consumer confidence are still low despite over a year of record low interest rates.
It is against this backdrop that REIA has prepared its pre-budget Submission.
With regard to addressing housing affordability, REIA has asked the Commonwealth Government to consider the following:
- That the Government establishes a mechanism to ensure the availability of reliable data on housing demand and supply in order to formulate appropriate policies and to monitor their effectiveness
- That the Government ensures that data on first home buyers is reliable
- That the Federal Government takes a leadership role in urging all states and territories to take the same approach to the provision of assistance to first home buyers regardless of whether the dwelling is new or established
- That the Government establishes a scheme to encourage young Australians to have access to their superannuation for the purpose of raising a deposit for a first home
- An improvement in the supply of housing for social housing tenants transitioning to private rental by utilising private investment.
As part of a package of taxation reform, REIA has asked the Commonwealth Government to consider the following:
- That the Government take a leadership role in abolishing stamp duties and seek to have an agreed timing across all states and territories
- That negative gearing be retained in its current form for the purpose of property investment.
- That capital gains tax on property investments is not increased
And finally, REIA has asked the Commonwealth Government to:
- Ensure that funding of the Industry Skills Fund is adequate to meet all skills shortages.
REIA’s pre-budget submission can be found HERE
As 2015 draws to a close it is timely to reflect on the remarkable year that has passed!
Economic circumstances are not greatly different to what they were twelve months ago – growth is still below trend, unemployment whilst relatively stable is lower than it should be for growth and business and consumer confidence are mixed despite record low interest rates.
Investor activity in housing which has been strong but is now slowing, as macro prudential measures take affect, has resulted in a supply response from the building sector which reports a better outlook than it has for some years and is taking up some of the gap in economic activity from a declining mining sector. In deed, dwelling investment has been the second largest contributor to growth in the Australian economy. Australia’s property industry is emerging as the main driver of economic growth and increased employment. CLICK HERE to read more.
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The REIA and the National Association of Realtors® (NAR) are offering special online courses to REIA’s members. The Certified International property Specialist (CIPS) designation will provide Australian agents with an opportunity to become part of the CIPS network comprising of 2,800 real estate professionals from 45 countries. CLICK HERE for more information.