New figures from the tax office show that landlords reported a record $5 billion in rental losses in 2006, up 25% on the previous year. Rising interest rates and property values increased tax-deductible interest costs by more than 14%.
Two thirds of landlords, more than a million investors, are claiming a loss on their investment property. Only half a million people said they made money from renting out property.
The growth in tax deductions for landlords was surpassed by the boom in net capital gains recorded by individual investors, which rose more than 30%.
Seven years ago, 650,000 landlords reported just $2.5 billion in losses, The Age newspaper reports.
Since then, the losses have more than trebled, growing by roughly 20% a year, while the number of landlords claiming them has risen 70%, as negative gearing has become increasingly popular.
Who pays most tax?
For the 2005-06 income year:
- Individuals accounted for 20.2% of total income, 62.8% of taxable income and 64.8% of net tax.
- Companies accounted for 75.5% of total income, 27.0% of taxable income and 28.8% of net tax.
- Superannuation funds accounted for 4.3% of total income, 10.2% of taxable income and 6.5% of net tax.
For the 2006-07 financial year:
- Fringe benefits tax collections totalled $3.4 billion, a decrease of 4.7% from 2005-06.
- GST liabilities increased by 6.7% to $39.7 billion.
- Excise liabilities were $22.9 billion, an increase of 5.1% from 2005-06 liabilities.
- Liabilities from wine equalisation tax were $645 million, a 2.7% decline on 2005-06.
- Luxury car tax liabilities increased by 15.2% to $371 million.
During the 2006-07 financial year:
- There were 359,370 self managed superannuation funds, with a total of 688,853 members.
- 755,363 individuals were liable for the superannuation surcharge, totalling $699 million.
- More than 1.7 million accounts were removed from the Lost Members Register.