Negative gearing: hard numbers on a weaking strategy

The chief economist at Macro Investor, Leith van Onselen, spent a week combing through the 2009-10 Australian Tax Office statistics, and found these sobering facts for property investors:

• Rental losses across all investment properties nationally averaged about $2750 per investor in 2009-10, or 5.9 per cent of average taxable income (excluding losses).
• Negatively geared investor losses are much higher, totalling about $9100 per investor in 2009-10, or 20 per cent of average taxable income (excluding losses).
• In 1998-99, the number of investors claiming net rental profits (positively geared) was roughly equal to those claiming net rental losses (negatively geared). The latest ATO data shows 1.1 million negatively geared property investors in 2009-10, representing nearly two-thirds of property investment.
• 76 per cent of property investors (74 per cent of negatively geared investors) earned total income of less than $80,000 a year in 2009-10, dispelling the myth that property price falls only harm the rich.

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