Monday 22 Sep 2014
Any move to scrap negative gearing would affect Australia’s “mum and dad” investors, according to research that shows 70% of those claiming the rebate earn less than $80,000.
With calls to scrap the tax never far from public debate, the research shows the property tax break is not just for the wealthy, as often assumed.
Negative gearing allows investors to claim full tax deductions for interest costs and other property expenses when the investment is less than the cost of owning and managing the investment.
Statistics from the Australian Tax Office, provided by the Property Council of Australia, show 883,325 of the 1.266 million taxpayers claiming benefits from negative gearing earned under $80,000 in 2011-12.
Job classifications from the ATO show the majority of those are teachers, nurses, clerical and emergency workers and salespeople.
Nick Proud, executive director of the Residential Development Council, told SmartCompany many would also be small business owners or sole traders, but it is difficult to determine given the ATO’s classification by industry.
The statistics also show 73% of the Australians accessing negative gearing only own one property and a further 18% own two.
“The majority of these people are not property barons,” says Proud.