Negative Gearing in Australia

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Negative Gearing in Australia.

Negative Gearing allows tax payers to offset business losses as a tax deduction against other income from a different income stream.


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It is commonly claimed by Investment Property Owners while their mortgage payments, and other costs,  exceed their rental incomes, normally in the first few years until rents catch up with and exceed mortgage payments

How rich are the people claiming Negative Gearing on Property Investments?

Not very rich it would seem: 68.9% of claimants had a taxable income of less than $80,000

How many people claim Negative Gearing?

13.1% of all taxpayers with a taxable income below $80,000 claim Negative Gearing
25.8% of all taxpayers with an income of more than $80,000 claim Negative Gearing

An average of $2,050 rental loss was claimed by those with a taxable income of under $80,000.
This would allow a maximum tax rebate on that $2,050 loss of $667 (32.5% of the loss).
For lower incomes, the tax rebate on that $2,050 loss would only be $390 (19.0% of the loss)

Should negative gearing be abolished?

Looking at the above figures we see that almost 70% of properties, that are rented out, are owned by people earning under $80,000.
If Negative Gearing is abolished, it means the property owners income drops by about $667 per year.
To make this up, means an increase in rent to the tenant of about $13 per week.


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Those owners on higher incomes, who lose a greater amount of tax, will need to raise rents even higher if they wish to recoup the loss from the Tenant instead of the general tax system.

If people choose to remove properties from the market instead, the result wuld be less properties for rent, and subsequently higher rents because demand exceeds supply.
Some say this was the cause for the abolishment of Negative Gearing by Labour in the 1980’s to be reversed.


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