Forget big time property magnates as the major beneficiaries of negative gearing; the latest Australian Taxation Office (ATO) statistics show it’s middle-income earners as the chief recipients.
Of the 1.87 million people who declare a net rental interest (i.e. own a rental property), 1.34 million of those earn around $80,000 or less. While nearly 1.26 million Australians declare a net rental loss, of this group 79 per cent (or 883, 325 people) earn around $80,000 per annum or less according to ATO statistics.
Nick Proud, Executive Director of Property Council of Australia says accurately determining the cost of negative gearing to the federal budget is imprecise due to gaps in the publicly available data, although analysis of ATO statistics indicates it’s well below estimates of $4 to $5 billion.
“The significant benefits of negative gearing in terms of housing affordability and retirements savings must be factored in to any analysis of the costs,” Proud says.
“Negative gearing is an indispensable tax measure that enables average workers to save for their retirement.”
The majority of Australians who declare a net rental loss (73 per cent) only own one investment property, and a further 18 per cent own only two properties.
“The ability for low to middle income Australians to negatively gear their investments also unlocks an important source of finance to boost the supply of new housing stock, which benefits affordability in the rental market,” Proud says.
“What is crystal clear from the available data is that negative gearing is overwhelmingly used by middle-income Australians earning around $80,000 p.a. or less.”
Analysis of net rental interest and loss by age group. ATO Statistics 2011/12
Source: Australian Property Investor :: The positives of negative gearing for middle Income earners
