"Mum and dad investors" at Dubbo would no longer be able to claim tax deductions through negative gearing under a new federal Greens policy that some local industry figures warn could decrease the supply of rentals.
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The party released sums that showed an extra $42 billion in revenue could be raised in the next decade by scrapping negative gearing, which it called "low-income taxpayers subsidising property investors".
But a Dubbo-based mortgage broker, an accountant and a university lecturer all warned an end to the practice could have a negative impact on the number of rental properties available, with one saying it was unjustifiably tagged a "dirty word".
Negative gearing is where rental income is less than the costs of owning the property - loan repayments, rates and other expenses.
It allows investors to use losses made on property investments to reduce their overall taxable income, but it has its critics and the Greens are proposing change on future new housing investment by July 1.
Greens deputy leader Scott Ludlam said negative gearing had failed to increase housing supply and had instead distorted the market and pushed out first home buyers. "It's low-income taxpayers subsidising property investors," he said
Dubbo mortgage professional Matt Wright reported of investors of more modest means.
"There is no shadow of doubt the clients we see are mum and dad investors buying their first or second investment property, not high-flying investors," he said.
"If negative gearing was removed it would have a negative impact on the number of properties available as rentals [over time].
"We think mum and dad investors are supplying those rental properties.
"What if they were not available - it would be up to the government."
Dubbo accountant Peter Singh said "from time to time" he had received inquiries about negative gearing.
Now semi-retired after nearly 40 years in the industry, he defended negative gearing, saying its status in some quarters as a "dirty word" was "unjustified".
Mr Singh said if anyone was prepared to risk taking on a large borrowing to fund the purchase of an income-producing asset, they should also be entitled to claim the holding costs as a tax deduction because the income from the asset was assessable for tax.
If the government took away negative gearing it may have an impact on the availability of rental property because it could lead to less investment, he said.
Charles Sturt University law lecturer at Bathurst Amanda Carrigan warned stopping the allowable tax deduction would have broader implications but not necessarily change the housing situation.
"It may make it worse," she said.
Ms Carrigan said negative gearing was just as important in regional areas as capital cities.
The Greens wanted the extra revenue to be used to build new affordable rental accommodation but Ms Carrigan questioned how the aim could be achieved.
"How would they identify the amount of money to put into social housing, how would they guarantee it," she said.