Capital Gain Tax and House Prices
Our Panel were recently asked for their opinions on the following proposition:
"Capital gains tax deductions for housing investment should be removed because they over-stimulate the housing market, contributing to rising house prices."
Supporters of the statement claim that the current CGT discount on nominal gains provides incentives to over-invest in property rather than other income-producing assets.
Those against the statement argue the timing may not be right as the housing cycle is currently at its peak, and the double digit house price appreciation rates are only seen in the inner-ring suburbs of metropolitan cities and only for houses and not apartments.