Mega landlords 'can't lose' as revenue collapse brings negative gearing boon
www.abc.net.au
Despite a surge in interest rates and a jump in loss-making rentals, few landlords are selling up. Experts say it's because negative gearing and the capital gains tax discount protect their investments.

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”.

  • CoolThingAboutMe@beehaw.orgEnglish
    2·
    3 days ago

    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.