Negative gearing and capital gains tax discount set to cost the budget $20 billion a year within a decade

The cost of negative gearing is set to blow out as interest rates rise and, with it, the capital gains tax discount is expected to cost the federal budget more than $20 billion a year within a decade.

Modelling by the independent Parliamentary Budget Office (PBO) — commissioned by Greens leader Adam Bandt — estimated that negative gearing would drain $12.7 billion from budget revenue in 2023-33 at the current cash rate of 2.85 per cent.