Capital gains, negative gearing and effective tax rates on income from rented houses in Australia

George Fane () and Martin Richardson

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: This paper reports estimates of effective tax rates on rental property income in Australia. We consider three capital gains tax regimes - the current Australian system, that which prevailed between 1985 and 1999 and a realisation tax that attempts to mimic an accruals tax. We report estimates for each regime in two scenarios - slow anticipated real capital gains and very rapid unanticipated real capital gains. Our results suggest that negative gearing should be retained and capital gains taxation reformed to approximate an accruals tax. We argue that this desirable package would be no harder to administer than the current regime.

Keywords: capital gains tax; interest deductibility; accruals; realizations; Australian tax system (search for similar items in EconPapers)
JEL-codes: H24 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004-06
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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