Overhaul of negative gearing too hard, says Bill Moss

Limiting negative gearing is morally right, but in practice negative gearing is too difficult to unwind, says Bill Moss.

‘So many people are using it, it’s too difficult to touch,’ says Bill Moss. Picture: Renee Nowytarger

Capping or limiting negative gearing is morally right, but in practice it is too difficult to unwind, says Bill Moss, a former head of property at Macquarie Bank. “So many people are using it, it’s too difficult to touch,” he said.

Altering either the GST or negative gearing would have major implications. In the case of negative gearing, its removal would result in job losses, lack of rental accommo­dation and lower state revenue from the loss of stamp duty and other taxes, Mr Moss said.

The Australian this week reported that the federal government was considering ways to cap the use of negative gearing — which allows tax deductions to be claimed against an investment property — without harming ­average workers. One plan ­includes setting caps of $30,000 to $50,000 on the amount that could be claimed for investment properties.

Negative gearing was established to ensure a supply of rental housing and as a means of moving “public housing” away from ­government ownership, he said.

“At the moment, we are building plenty of housing. Do we need a government subsidy? No, we don’t,” he said.

However, the residential building boom would end.

If ensuring a supply of affordable housing was the goal then this could be better influenced through the banking system than the tax system, Mr Moss said.