The ATO data, released exclusively to the ABC, shows the only investors making an average rental loss in 2022–23 were those with 19 or more property interests, both on an individual investor and individual rental basis.
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In 2022–23, profits from investor-owned rentals plummeted 73 per cent.
In dollar figures, that equated to net rental income (income after expenses) falling from almost $5.9 billion in 2021–22, to less than $1.6 billion in 2022–23.
Despite the drop, investor numbers, and the number of rentals they owned, shrank less than 1 per cent, suggesting falling rental profitability did not trigger any significant rental sell-off.
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The ATO data showed mega landlords with 20 or more rentals were the only group that made average losses throughout the COVID-19 era of record-low interest rates.
Mr Eslake says this underscores the importance of negative gearing to the wealthiest investors and scuppers the argument that it is predominantly used by “mums and dads trying to get ahead”.
Obviously negative gearing and capital gains tax concessions have to go. I think gone completely, all at once is probably not the right move but I’ll let the modelling people figure that out.
That said, using interest rates as a way to throttle economic activity is fucking bullshit.
With the eye watering interest rates we’ve had over the last several years it’s been Gen X and under doing the heavy lifting while as usual boomers enjoy the benefits.
I don’t really have a solution but fuck me there has to be a better way.
We’ve legislated ourselves into a corner - we can’t get rid of CGT concessions and negative gearing without crashing the housing market and therefore our economy…
The only way out is slowly introduced reform that aims to flatten house prices, but it has to be done almost clandestinely so as to not scare investors.
I agree that changes need to be measured and carefully considered.
There’s so many ways to do that though, grandfathering or capping.
Gen x here. Agree. We get leveled. Again. Whilst the boomers just coast through it, mortgage free, reaping bucket tonnes from their multiple properties and huge super, and sipping their laté in delight.
I feel like higher interest rates smashed renters.
It’s weird to say that because of negative gearing, property investors can’t lose. Negative gearing is literally losing. You can only negative gear when you’re making a loss.
Yeh I think a lot of people don’t seem to get this. My husband and I have an “investment property” (super rural, was sub $200k, all we could afford for a first house, not much more than a shed) that my parents live in now after we moved to a city for work. They pay a tiny amount of rent which only covers a portion of the mortgage repayments, so the place is negatively geared.
But the money we’re spending on keeping my parents housed is not free money we get back in full at tax time. Some of it just comes off our taxable income, so we get a very slight tax break. I cbf doing the full maths right now but if we spend $4000 on rates and water and interest for that house we might get something like $1000 off our owed tax. Still down $3000. Plus down the principal mortgage repayments not covered by rent (~$4000), because they can’t be claimed.
Which is fine. I’m grateful to be in a position to be able to support my parents, and I know it’s not a typical landlord situation.
I’m also certainly not saying negative gearing is totally fine and should never be questioned. There are definitely too many consessions that parasites with huge portfolios of properties take advantage of. And I’m sure there are people that game the system to their full advantage.
I just, yeah, for me negative gearing just very slightly reduces how much it costs to not charge my parents much rent. It’s not a golden goose or anything.
