New Australian Tax Office (ATO) tax data has brought into question attempts to limit negative gearing.
Ken Morrison, chief executive of the Property Council of Australia, says total losses from investment properties have fallen from $7.9 billion in 2011 -2012 to $3.7 billion in 2013- 2014, according to the ATO data.
“The potential budget impact [on] taxpayers of negative gearing has fallen by over 50 per cent in two years,” he says.
“Investment in property is driving jobs, growth and keeping rents down.
“At the same time, there’s absolutely no evidence that negative gearing is being abused.”
|Taxation statistics 2013-14|
|Individual rental income and deductions ($ billions), 2010–11 to 2013–14 income years|
|Rental income and deductions||2010–11 $b||2011–12 $b||2012–13 $b||2013–14
|Gross rental income||30.7||34.0||36.6||38.8|
|Rental interest deductions||22.7||24.2||22.5||21.4|
|Capital works deductions||1.9||2.2||2.4||2.7|
|Other rental deductions||14.0||15.5||17.0||18.4|
|Net rental income||-7.9||-7.9||-5.4||-3.7|
In the past 12 months, Australia has seen a substantial rise in the number of individuals with a rental interest. Nicholas Proud, principal of Property and Construction Analytics Australia, says this is mainly due to the increase of middle Australians in the residential market.
“In terms of additional investors, the numbers of individuals with a rental interest and a taxable income between $37,000 and $80,000 has increased by 8,872 over the year, with those in this taxable income bracket hitting 707,282 individuals with a net rental interest,” Proud says.
“The largest volume increase in overall investors came through an additional 42,362 individuals in the $80,001- $180,000 taxable income bracket.
“Middle Australia is clearly buying into residential property and this is the largest increase in net rental interest over the year. This taxable income group makes up 34.7 per cent of all individuals with a net rental interest.”
There was also a:
- 12.9 per cent increase, or 9,029 additional individuals, in the $180,001-$250,000 taxable income bracket with a net rental interest.
- 10.3 per cent increase, or 5,023 additional individuals, in the $250,001-$500,000 taxable income bracket with a net rental interest.
- 12.4 per cent increase, or 1,431 additional individuals, in the $500,001-$1,000,000 taxable income bracket with a net rental interest.
- 18.5 per cent increase, or additional 729 individuals, in the $1,000,000+ taxable income bracket with a net rental interest.
“There has been a clear growth in the number of lower- to middle-income earners that have joined the investment ranks over the past several years, with those earning over $80,000 growing the largest in terms over the 12-month period,” Proud says.
“By age, younger investors are still the most likely to rely upon negative gearing, with 82 per cent of all property investors aged between 18 and 29 declaring a net rental loss.”