Breaking down negative gearing - and what the housing crisis means for women

Breaking down negative gearing – and what the housing crisis means for women

Shelter is a human right: everybody needs a place to live, a place to call home. But Australia is in the midst of a devastating housing crisis, making it harder and harder for people to afford a home.

The housing crisis is disproportionately impacting women. Women earn less than men, which means they are paying more of their income on rent and older women are the fastest growing cohort of people experiencing homelessness

It’s up to the government to fix the crisis, and in the last few weeks, housing has been furiously debated in parliament.

Last week, the Greens joined the Coalition to block Labor’s Homes for Australia Plan from passing in the Senate. The reason? Two words: negative gearing.

Whilst the Greens have consistently advocated for negative gearing and capital tax concessions to be wiped, this is not in Labor’s housing policy. This morning, following reports that Labor had requested modelling from the Treasury on regulating negative gearing, Prime Minister Anthony Albanese confirmed that the ALP would not be taking negative gearing reform and capital gains tax reform to the 2025 election.

But what does negative gearing mean? What’s next for the government’s response to the housing crisis – and what would it mean for Australian women? Here’s what you need to know.

What is negative gearing?

Negative gearing means taxpayers who own an investment property can claim losses from their property/s to reduce their taxable income. This essentially means if you’re losing money from expenses paid on your investment property, you can claim that as a tax deduction and pay less tax – all the while your property could increase in value overtime.

According to the Australian Tax Office, about 2.2 million people were landlords in 2021, with about 1.1 million having a rental loss – that is, they were negatively geared. There was about $7.8 billion in rental losses and therefore about $2.7 billion in tax benefits to those landlords in the year to June 2023.

The Greens are staunchly opposed to negative gearing: at the crux of the party’s housing policy is to scrap negative gearing and capital tax breaks. According to the Greens, negative gearing largely benefits the top 10 per cent of income earners, while also pushing up housing and renting costs, pricing out middle and lower income earners from the housing markets.

Scrapping negative gearing is not in Labor’s housing policy, but a report from The Sydney Morning Herald on Wednesday suggested Labor was considering options to scale it back and potentially put a cap on the number of properties home owners could negatively gear.

This morning, Prime Minister Anthony Albanese confirmed his party would not be taking a housing policy that wipes negative gearing to the 2025 federal election: instead, his government is focused on “planning for our Homes for Australia policy” and “putting that downward pressure on inflation”.

How is housing disproportionately affecting women?

In March this year, CoreLogic released its annual Women and Property report. The report found that overall, slightly more women than men own a home in Australia. However, men had higher property values and lower debt levels than women, according to the report. Women were also more likely to co-own a property than men.

Much of the disproportionate impact of the housing crisis on women goes back to Australia’s gender pay gap which, according to the Australian Bureau of Statistics (ABS), is 11.5 per cent: that is, full-time working men earn $1,982.80 per week, while full-time working women earn $1,744.80 per week.

Take renting, for example. It is a common recommendation for renters to spend no more than 30 per cent of their income on rent.

The current median rental price in Sydney is $726 per week, according to CoreLogic’s Quarterly Rental Review (latest release October 2023). With the ABS’ estimated average weekly incomes, this means men would spend 37 per cent of their income on rent. Women would spend 42 per cent.

Another way we can see the housing crisis play out in real time, hitting women the hardest, is the rate of homelessness in Australia. And women are the fastest growing cohort of people experiencing homelessness in Australia.

In the 2021 Census, 44.2 per cent of the 122,494 people estimated to be experiencing homelessness were women. This was a 10.1 per cent increase from the 2016 Census, according to the Australian Bureau of Statistics: women accounted for 81.7 per cent of the 6,067 increase of people experiencing homelessness in 2021.

What’s next?

The Greens have vowed to keep putting pressure on Labor on negative gearing, despite the Prime Minister ruling it out this morning. Leader of the Greens Adam Bandt said the ALP “must commit” to winding back negative gearing and capital gains tax.

“These unfair tax handouts are driving the rental and housing crisis,” Bandt wrote in a social media post.

“This kind of reform could start to fix the housing crisis and see Labor’s weak housing bill pass the Senate.

“They’ve admitted it’s possible. We’ve got to keep the pressure on. The Greens will not stop fighting in parliament for renters and first home buyers.”

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