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A brief history of negative gearing in Australia

Negative gearing is not a recent phenomenon – it has been allowed under Australian tax laws since1936.

But it wasn’t until the 1980s that it became a focal point of policy debates.

In 1985, the Hawke government briefly removed negative gearing, hoping to curb property speculation and make homes more accessible. However, this move backfired.

With fewer investors willing to take on the costs without tax relief, the rental supply shrank, and rents skyrocketed, especially in Sydney and Perth.

Recognising these impacts, the government reinstated negative gearing in 1987.

This experiment showed that curbing negative gearing didn’t increase housing affordability but rather strained the rental market, leaving lower-income households particularly vulnerable.

This historical precedent demonstrates that removing negative gearing could lead to similar challenges in today’s market, potentially exacerbating the very problem it seeks to solve.

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Jason Gwerder
Friday, 31 January 2025


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