40 percent of foreign investors make negative gearing property claims

40 percent of foreign investors make negative gearing property claims
40 percent of foreign investors make negative gearing property claims

Foreign property investors are claiming more than $200 million a year of negative gearing tax deductions, a News Corp Australia analysis of latest Australian Taxation Office data shows.

It concluded there were almost 56,000 foreign real estate investors in Australia in 2014, up from 52,700 the previous year.

More than 40 per cent of them used the negative gearing rules, which allow investors to claim a tax deduction when expenses exceeded rental income from their invstment property.

A spokeswoman for Treasurer Scott Morrison said “tax changes to be made by the Government will be announced in the Budget”.

The new ATO data shows 22,529 foreign investors claimed almost $208 million of net rental losses in 2013-14.

Based on Australia’s tax rates for foreign residents of between 32.5c and 45c in the dollar, those negative gearing losses are estimated to have saved them more than $76 million in tax.

Real estate experts say any savings from banning foreigners from using the tax breaks would have little impact on the Federal Budget and may be counter-productive.

Foreign real estate investors in Australia: almost 56,000

Foreign investors using Australian negative gearing rules: 22,529

Amount of net rental losses claimed: $208 million

Total tax saving: more than $76 million

Tax rates for foreign residents: between 32.5c and 45c in the dollar

Source: 2013-14 Australian Taxation Office data

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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