Grim warns every home buyer to hear, since Peter Dutton proposes a radically new housing plan that has never before tried in Australia: ‘worst decision’

A leading tax expert has warned Peter DuttonThe radical new housing plan will only increase house prices without resolving Australia’s delivery problems.

An economist who was once chairman of the young liberals described the announcement of the opposition leader as “the worst decision about the public policy of the 21st century.”

Mr. Dutton used his campaign launch -launch that, under a coalition government, buyers of the first house would be able to claim a maximum of $ 650,000 in interest charges as a tax deduction, provided that it is a brand new real estate.

For the first time in Australia, owners would be able to claim mortgage repayments as a tax deduction.

They would also be saved from paying capital gains tax if they sold their capital.

At present, only landlord investors can claim rent losses on tax under negative gearing.

When they sell, investors pay capital gain tax with a 50 percent discount.

Professor Robert Brenig, the director of the Tax and Transfer Policy Institute of the Australian National University, said that the policy of the coalition, designed to last only five years, would only increase house prices without resolving the supply restrictions.

A leading tax expert has warned that Peter Dutton’s radical new housing plan will only increase house prices without solving Australia’s delivery problems

“We are going to stimulate the question of something that is too expensive,” he told Daily Mail Australia.

The United States and Switzerland allow owners to claim mortgage repayments on tax.

But those countries also raise a power gain tax on the occupiers of the owner when they sell.

Prof BRUING said that the coalition policy was something unprecedented by making mortgage repayments tax deductible for something that would not be taxed later.

“What is a bit weird here is – it really flies in the light of everything else in our tax system – is to give a tax deduction for something where we will not tax the income later,” he said.

Economist Saul Eslake said that the newest policy of the coalition, in combination with his plan to allow the buyers of First House to pull up to $ 50,000 out of their super, only the housing market of Australia should be in turbo.

“Making interest payments on a mortgage tax deductible will inevitably lead people to use larger mortgages than they would do differently,” he told Daily Mail Australia.

‘If you combine that two policy, I think it is a candidate as the worst decision about the public policy of the 21st century.

Mr Dutton used his campaign launch on Sunday to explain that under a coalition government, first house buyers would be able to claim a maximum of $ 650,000 in interest charges as a tax deduction, provided that it is a brand new real estate (depicted new houses in Oran Park in the southwestern Sydney)

‘When the coalition says that the average buyer of the first house will save $ 11,000 as a result of this policy – no, he or she not; What the average buyer of the first house will do will be to say: “Aha, I can now afford to eliminate a larger mortgage to buy a more expensive real estate” and that is what they will do and property will become more expensive because they always do if the interest rates fall. “

In the Futures Market, the Contan Rate of Reserve Bank of Australia is falling from 4.1 percent by the end of 2025 now to 2.85 percent.

Mr. Eslake, a former federal president of the young liberals, said that the coalition policy would lead to future governments bending for political pressure to enable all owners of owners to claim mortgage allowances against their tax.

‘Part of the risk here is that there will be inevitable requirements to extend it after the five -year period that the coalition has promised; To broaden the suitability to take buyers of the first home of established and new houses; And finally to expand it to all buyers of home, “he said.

“So this can be the tip of a very large iceberg.”

The policy can also become a permanent costs for the budget.

“It would represent a large gap in the income basis, just like negative acceleration, combined with the excessively generous capital gain tax credit a gap of several billions of dollars in the income needed to pay all expenses,” Mr Eslake said.

Under the coalition policy, announced on the campaign of the liberal party launched in southwestern Sydney, Interest payment would be tax deductible on the first $ 650,000 of a mortgage.

“We will allow these subjures for five years, provided that you continue to live in that house for that period,” said Mr. Dutton.

The policy would be available for people with a taxable income of $ 175,000, or for couples who earn up to $ 250,000.