This report outlines how negative gearing and the 50% capital gains tax (CGT) discount have contributed to inequality and housing affordability issues. The authors suggest that the Australian Government should halve the CGT discount over five years and restrict negative gearing for new investments, investing the revenue raised in social and affordable housing.

The authors recommend reforms to negative gearing and the CGT discount that could raise $19b over four years and potentially fund up to 49,000 additional social and affordable homes per year.

Key findings

• The top 10% of households by income receive 82% of the $16b CGT discount and 39% of all tax deductions for rental properties.
• The median home price has doubled from 4 to 8 times median income since the capital gains discount was introduced in 1999.
• The proportion of income needed to meet mortgage repayments has risen from 27% in 2001 to 49% in 2024, and renters now spend an average of 33% of their income on rent, up from 26% in 2006.
• Taking into account population growth, social housing lettings for people with low incomes declined by 58% from 1991 to 2023.