Average workers the major beneficiaries of negative gearing
Of the almost 1.26 million Australians who declare a net rental loss, 883,325 people earn around $80,000 per annum or less and around 79 per cent of them negatively gear according to the latest available Australian Taxation Office (ATO) Statistics.
The majority of Australians who declare a net rental loss – almost 73 per cent – only own one investment property. A further 18 per cent only own two investment properties.
A breakdown of net rental losses by occupation shows that average workers made the majority of declarations. They include: 62,000 clerical staff; 54,000 teachers; 47,000 salespeople; 36,000 nurses; and tens of thousands of hospitality workers.
The majority of people who declare a net rental loss are aged 40 or under.
Not all Australians who declare a net rental interest (i.e. own an investment property) declare a net rental loss (i.e. negatively gear). Of the 1.87 million people who declare a net rental interest, 1.34 million earn around $80,000 or less.
These 1.34 million middle-income earners are providing housing for other Australians through their investment and at the same time looking to provide for their own retirement incomes, reducing reliance on government.
The Property Council of Australia’s Executive Director Residential, Nick Proud, said accurately determining the cost to the federal budget of negative gearing is imprecise due to gaps in the publicly available data however analysis of the available ATO statistics suggests it is well below estimates of $4 – 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,” Mr Proud said.
“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.
“Negative gearing is an indispensable tax measure that enables average workers to save for their retirement.
“It also helps encourage young Australians and first homeowners to take their first step into the property market by providing what can be a more economical option – purchasing initially as an investment rather than as an owner occupier.
“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.
“With Australia, and Sydney in particular, facing significant shortages in housing supply that are putting upwards pressure on houses, negative gearing is an important mechanism to help address this problem.”
Media contact: Fiona Benson | M 0407 294 620 | E [email protected]
Analysis of net rental interest and loss by age group, ATO Statistics 2011/12[i]
[i] https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2011-12/ Note: this is the latest available data from the ATO, with the release of 2012-13 Tax statistics report due mid-year.