Treasury’s analysis of negative gearing and the capital gains tax discount may have overstated benefits for real estate investors because it failed to account for the payment of state property taxes, adding to a growing backlash against Labor’s federal budget.
The May 12 budget included analysis of how negative gearing compounded the effects of the 50 per cent capital gains tax on housing to provide large tax breaks for real estate investors, many of whom pay less income tax than they would have if they had not purchased the property at all.
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