Landlord numbers have doubled since negative gearing reintroduced in 1987

The proportion of Australian taxpayers that have become landlords has more than doubled since negative gearing was re-introduced  in September 1987 with a surge in those who claimed losses on their investments from 1999 onwards, according to analysis of ATO figures by MacroBusiness.

The negative gearing tax break for property investing was briefly abolished between 1985 and 1987 by the Hawke government, before being hastily reintroduced.

"Australia has morphed into a nation of landlords. In 1989-90, 696,000 taxpayers – 7.2% of the total – reported net rental income to the Australian Taxation Office (ATO). But in 2010-11, 1,811,000 did – 14.2% of total taxpayers," writes MacroBusiness's Leith van Onselen.

The surge in property investing from 1999 coincided with the ability of investors to minimise their tax bills via negative gearing, combined with easier access to credit – more lenders, a diversity of lending products, growth of mortgage broking - and the halving of Capital Gains Tax (CGT) in 1999 by the Howard government.

Recently, both the Coalition and the incumbent Labor government said they had no plans to remove negative gearing.

The graph below documents the rise in the proportion of taxpayers who are landlords (blue line) since 1979, with a steep rise occurring from around 1989 onwards.

The red line shows the proportion of landlords who negatively gear their investments has risen from around 6% in 1999 to in excess of 9% in 2011.  

macrobusiness_chart_1

The recently published 2010-2011 ATO annual report revealed that around two-thirds of 1,811,174 property investors - 1,213,597 taxpayers – claimed losses on their investment properties for the 2010-11 tax year up from 1,110,290 who claimed losses in the 2009-10 tax year.

The average loss recorded for negatively-geared property investors was $10,947 in 2010-11, up from $9,132 in 2009-10.

The highest proportion of tax payers claiming rental deductions are those earning between $37,000 and $80,000 per year, making up more than a third of all negatively-geared property investors.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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