6  BIS Review 108/2006  Tax treatment will often prove a deciding factor in decisions about housing versus equities, direct versus portfolio approaches, and onshore versus offshore investments. From this individual point of view, housing-heavy investors may look to be acting rationally. In particular, capital gains on housing assets are usually tax exempt, while those on financial assets are often not.
In addition, households can negatively gear investment properties so a loss is created, which can be deducted from income for tax purposes. But it is not the purpose of this speech to examine the implications of tax policy for household decision-making.