Tax breaks for investors using homes as short-stay accommodation could be costing Australian taxpayers hundreds of millions of dollars per year, according to a new report by Everybody's Home. The Short-Stay Subsidy report estimates that this financial year the budget could be losing between $111 million and $556 million in forgone revenue through negative gearing deductions claimed on short-stay rental properties. Across Australia 167,955 entire homes are estimated to be operating as short-stay accommodation instead of long-term rentals, yet owners can still claim negative gearing and the Capital Gains Tax (CGT) discount. The report found:
- If just 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.
Everybody's Home spokesperson Maiy Azize said: "Everyday people are footing the bill for property investors to write off losses from holiday homes, all while families are being priced out of their communities because they can't find affordable rentals. "Renters across the country are being squeezed by soaring rents and a shrinking number of affordable homes - and in many parts of the country, short-stay accommodation is only making it worse. Generous tax breaks for investors, including for short-stay accommodation, are driving wealth inequality and pushing up house prices for everyone else. "While governments claim to be serious about the housing crisis, they're doing little to show it. At a time when government funding for public and community housing is falling far short of need, we shouldn't be subsidising investments in holiday homes and short-stay rentals. "Curbing investor tax breaks for holiday lets is one of the fastest and fairest ways to free up funding for the homes we need. If we close these loopholes, the savings could help build more desperately needed low-cost, long-term rentals. "Tax breaks need to be wound back for all investors, but it's even harder to justify giving these generous benefits to short-stay operators. The system is propping up investors who are speculating on short-term rentals during the worst housing crisis in living memory. We shouldn't be losing public money to underwrite short-stay speculation while millions of people face housing stress, insecurity, or homelessness."
