There are demands for the economic reform summit taking place today in Canberra to contemplate revamping Australia’s negative gearing and capital gains tax breaks.

Under the controversial system, property owners claim back billions of dollars in tax concessions.

The property industry claims the two policies provide owners with an incentive to invest, ensuring a supply of rental properties.

Everybody’s Home national spokesperson Maiy Azize says too many Australians are paying the price for the wealthy’s tax concessions.

“These tax breaks are among the most unfair and distortionary in our economy,” he said.

“They make housing less affordable, benefit higher-income Australians, and lock everyday people out of safe and affordable housing.

“Cutting them and using the savings to build low-cost rentals will mean more people will be able to afford a safe place to live.”

How does negative gearing work?

Negative gearing is a tax concession that applies when the cost of owning an investment outweighs the income it generates.

The owner can then deduct that net loss from their overall income and lower their total taxable income, and therefore reduce their tax bill.

It can apply to any kind of investment in Australia but is most commonly associated with investment properties.