Are property investors the bad guys?

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Property investors are often villainised in the popular imagination. They’re perceived to be regularly outbidding first-home buyers and snapping up residential property solely for negative gearing purposes. Their speculative activities are also blamed for the housing boom in Sydney and Melbourne.

Far from being the “bad guys,” property investors actually keep the Australian economy afloat, according to Simon Pressley, managing director of Propertyology.

The federal, state, and local governments collect about $50bn in property taxes annually, according to research from Propertyology. Moreover, property investors pay substantially higher rates than owner-occupiers.

“Let me be frank – without property investors, the Australian economy is stuffed,” Pressley said. “Homeowners and investors fork out a staggering $50 billion in taxes every year and for what? The privilege of investing for their future and providing homes for millions of Aussies!”

Pressley said he’s “sick and tired” of property investors being blamed for every perceived issue in the property market when they make significant financial contributions to the economy. “Take away that tax revenue and our economy won’t survive – plain and simple,” he said.

Given that more than 50% of state and local government revenue comes from property taxes, such as stamp duty, land tax, and council rates, Pressley said he struggles to understand why property investment is currently being discouraged by our politicians

“Australia needs to encourage investment, not penalise those who are trying to responsibly plan their future to avoid becoming a liability on Australia’s financial system by way of reliance on a taxpayer-funded pension,” he said.

Pressley believes saving and investing wisely should not be treated as a dirty concept. “What’s the alternative to investing? For those who are critical of investors does that mean that they are advocates of spending everything that they earn? Is that a good thing? Is that what they advocate to teach their children to do also?”

The windfall from all this investment is staggering: each year, property investors pay $8bn in stamp duty, $7bn in land tax, and $130m in council taxes; investors also pay tax on $7.5bn of net rental gains, according to research from Propertyology.

Without the billions collected from tax dollars, vital services and infrastructure would not be funded, according to Pressley.

“The $8 billion paid by investors on stamp duty in 2014/15 covers the entire cost of the Badgery’s Creek airport,” he said. “The $7 billion that governments collected from land tax would fund Brisbane’s long-awaited Cross River Rail project, while also having change leftover to build three to four new hospitals in regional cities.”

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