Housing industry statistics showing “average Australians” make up the vast majority of property investors and landlords are a myth, according to the ABC’s Michael Janda.
Writing at The Drum, Janda says even though “Tax Office statistics show there are almost 1.9 million individuals who declare rental income or, more typically, make rental losses” it’s surprising that the HIA says “nearly three quarters of them earn a taxable income of $80,000 or less.”
Janda wondered how that could be the case when RBA and the HILDA (Household, Income and Labour Dynamics in Australia) longitudinal surveys show overwhelmingly it is wealthier Australians, the top 20% of income earners, who always pop out as the main beneficiaries of negative gearing.
Recently research from the Australia Institute reinforced the notion that its wealthier Australians benefiting the most from negative gearing.
Negative gearing of residential investment property is currently reducing tax revenue by $3.7 billion per year. Half of the tax break flows to the top 20% of households. By comparison the bottom half of Australians only get 20% of the benefit of negative gearing.
That means that the assertion that three-quarters of all property investors “earn a taxable income of $80,000 or less,” seemed spurious to Janda.
But the issue is so obvious, but he’s the only one who seems to have picked it up.
Janda said the “issue with the HIA’s use of the ATO data was that it looked at taxable income – after people take out various deductions to lower their tax bills.”
So when he crunched the numbers he found the HIA’s numbers were, by various measures, easily discounted back from 75% to 60%. Still too high he says compared to the HILDA data.
Janda says “the very reason that many housing investors fall below the $80,000 threshold is because they have used negative gearing to slash their tax bill.”
He says the claim that most landlords in Australia are mums and dads is “massively overstated”.
You can read Janda’s full article with all his detective work here.