This report examines a specific and under-recognised way in which housing tax concessions are undermining affordability, by subsidising the removal of homes from the long-term rental market altogether. The report estimates the cost in foregone revenue to the Federal Budget of negative gearing deductions claimed on short-stay investment properties, such as those listed on platforms like Airbnb and Stayz.

The report argues that this policy failure must be addressed. It recommends phasing out tax concessions for investors, starting by disallowing negative gearing deductions for short-stay investment properties as a first step. In the longer term, the report recommends broader structural reforms to phase out tax concessions that are not serving the public interest. Without action, the tax system will continue to drive inequality, entrench housing insecurity, and undermine efforts to deliver affordable homes to those who need them most.

Key findings

• If 10% of short-stay rentals were negatively geared, the annual cost to the budget is estimated to exceed $111 million.
• This figure jumps to $556 million in estimated annual lost revenue if half of all short-stay investors claim negative gearing deductions.
• Tax reform on short-stay accommodation has the potential to reclaim billions in revenue over the next decade.
• Renters say they are being affected by the magnitude of short-stay accommodation, including facing soaring rents, evictions, and in some regions, limited long-term rental supply.